Reliance Jio’s Entry to Intensify Telecom Competition

Reliance Jio’s Entry to Intensify Telecom Competition


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Soon the competition in the telecommunication sector will escalate as Reliance Jio is all set to enter the industry with the faster and cheaper 4G services in the first quarter of 2016, as revealed by Fitch Ratings. Consequently, this will lead to decline in the tariff plans among the top telecom companies.
As Jio is likely to offer cheaper data rates in order to grab more market share, the data tariffs of other telecom companies are likely to fall by 15-20 percent.

Fitch Ratings stated, “We expect competition to intensify as Reliance Jio, part of Reliance Industries, enters the market with likely cheaper and faster data-focused tariff plans armed with sufficient spectrum and access to funds.”

Tagging the market condition as stable, Fitch Ratings further revealed, “We expect blended monthly ARPU (average revenue per user) to fall by 5-6 percent to around Rs 160 (2015: Rs 170) due to a decline in data tariffs, which will more than offset the rise in data usage.”

To combat the competition, other telecom companies are likely to offer more discount and promotional schemes to frequent users to retain customers. The overall data revenue is also likely surge to 25-27 percent as compared with the previous year which was 18-20 percent. With intense competition, the companies are likely to improve voice call quality.