In Short:
Reliance Jio is rapidly approaching 500 million users, but its Average Revenue Per User (ARPU) growth has been poor in the last four quarters. Despite rising overall revenues and net income, Jio’s ARPU is crucial for potential investors as it plans to get listed on the stock exchanges. Jio hopes to increase ARPU through tariff hikes post-elections and charging for access to its 5G network, unlike its competitor Airtel, which has seen healthier ARPU growth with premium plans.
Reliance Jio’s ARPU Growth in Question Despite Rapid Subscriber Growth
Reliance Jio, India’s largest telecom operator, is nearing the significant milestone of 500 million users. However, despite the impressive rise in its subscriber base, concerns are being raised about the stunted growth of its Average Revenue Per User (ARPU) over the past four quarters.
Importance of ARPU
ARPU is a crucial metric in evaluating a company’s ability to sell or upsell services at a competitive price within the industry. Jio’s current strategy of not charging extra for 5G services has limited its 4G revenue potential, but with a large user base of over 108 million 5G users, there is room for growth once 5G is monetized.
Comparatively, Airtel, a key competitor, has seen healthier ARPU growth despite not charging extra for 5G. Airtel’s slightly premium plans have contributed to this growth, emphasizing the different market approaches of the two telecom giants.
Future Expectations
Reliance Jio anticipates a potential tariff hike post general elections to boost its ARPU performance. As of Q4 FY24, Jio’s ARPU stood at Rs 181.7, showing minimal increase from the previous quarter. The company’s strategy to increase ARPU hinges on upcoming mobile tariff revisions and the introduction of premium charges for 5G network access.
