Reliance Jio is struggling to grow its average revenue per user (ARPU) per month the way Airtel is growing it. Jio’s ARPU for Q3 FY23 was Rs 178.2, and in the previous quarter (Q2 FY23), it was Rs 177.2. In Q1 FY23, Jio’s ARPU was Rs 175.7. This is a very slow growth of ARPU despite the tariff hikes in 2021. It looks like the effect of the tariff hikes has faded from the business of Jio, and now, without any further hikes, the telco’s ARPU is going to grow at these small margins only.
Slow ARPU Growth Affecting Profit Growth as Well
The slow growth of ARPU is also affecting the overall profitability of Reliance Jio. While the telco boasts the largest profit made by any operator in the country, it also is very much behind Airtel in maximising revenues from customers. Airtel’s ARPU for Q2 FY23 was Rs 190. It is expected to grow to Rs 194 in Q3 FY23. Read More - Reliance Jio Posts Rs 4881 Crore Net Profit for Q3 FY23, ARPU at Rs 178.2 The lower the ARPU, the lower the overall revenues, and the lower the profits. Of course, the private telcos are going to benefit from the no SUC (spectrum usage charge) on the spectrum bought in 2022 auctions. So the expenses should be lower on that side; however, it would be offset by the rise in network capex to roll out 5G. Thus, the expenses, even though they are going up, the ARPU is standing almost where it used to be. Read More - Ericsson’s Network Business Grew in India During Q4 Because of 5G Jio won’t be able to grow its overall revenues on a significant scale if the telco doesn’t go for tariff hikes. Jio’s ARPU is very far from Airtel’s ARPU. It reflects the difference in tariffs that both the operators offer. Airtel’s a more premium player, and hence its tariffs are generally 20% higher than Jio’s plans. Analysts have also said that Jio needs a tariff hike in order to get its revenues and profits up. The next round of tariff hikes is expected to come later this year as other telcos, including Airtel and Vi (Vodafone Idea), have been very vocal about raising the tariffs.
