Users of Reliance Jio’s 4G service have started cutting down on their data and voice usage the company implemented price increases in December, thus limiting the benefits of the price hike from fully flowing through to the company.
The average data consumed by a Reliance Jio user fell to 11.1 GB per month during October-December period from 11.7 GB in the preceding three months.
Voice usage on Jio too fell to 760 minutes per month during October-December from 789 minutes per month during July-September.
Interestingly, the sharp slowdown in consumption was seen even though the price hike was implemented only in December, when the quarter was about to come to an end.
If the price hike had been implemented in October — at the beginning of the quarter — the slow down in consumption would likely have been far more impactful. It is therefore likely that average data use per customer could fall to around — or even below — 10 GB per month in the current (January-March) period.
Jio had increased data prices by around 25%-30% across its plans in the second week of December, saying that it needed the extra cash to continue to make investments into the network.
“We will..take measures including appropriate increase in tariffs in next few weeks in a manner that does not adversely impact data consumption or growth in digital adoption and sustains investments,” the company had said at the time.
As a part of the price increase, Jio also started putting a monthly cap on the number of free minutes of voice calling that its subscribers could make to non-Jio networks.
Because of this, Jio said, total outgoing calls to non-Jio networks fell by 48% by the end of December.
Jio aggressively purged its subscribers during the quarter. Unlike Airtel and Vodafone Idea, Jio had never been overly concerned with purging customers who were not regular in their recharges, and did not bother to deactivate their numbers as promptly as the other two operators.
However, there was a sudden increase in the number of deactivations in December.
During the three month period from October to December, 37.1 million users joined Jio. During the same period, Jio removed 22.3 million users. In comparison, Jio had removed only 7.6 million users in the preceding three months (July-September).
One of the side-effects of the purge was that the net addition of subscribers during the month of December was only around 1 lakh, compared Jio’s usual run-rate of around 1 cr users per month.
Interestingly, the increase in price failed to give a big boost to the company’s revenue, as many analysts had expected.
Unlike competitors like Airtel and Vodafone Idea, Jio has always been more relaxed about pricing, and emphasized that it is more focused on getting its users to spend more per month and less on the price they were paying.
In an ideal world, a 25% increase in tariff would result in a 25% increase in Jio’s revenue. However, if subscribers reduce their consumption by an equal amount, this would cancel out the impact of the price hike.
In this case, Jio’s total revenue increased by only 6.2% despite an increase of 4.2% in subscriber numbers.
In a regular quarter, with no price increase, Jio’s revenue would normally increase by around 4-5%. In other words, the price hike, by all evidence, seems to have contributed only about 1-2% to the company’s revenue.
To be fair, though, the revenue increase too would have been restricted to the last 25 days of the quarter, given that it was implemented only on December 6.
Some of the trends were also visible in the per-subscriber numbers, even though per-subscriber numbers were influenced by the purging of inactive users.
Nevertheless, average revenue generated by a single user in a month increased by 7% to Rs 128.40 during October-December from Rs 120 in the previous three months. Without the purging of subscribers, the increase in ARPU would have been lower.