Mobile data rates will see a further drop to as low as Rs 2.7 per GB with Reliance Jio announcing extra 500 MB data for its users of select plans as part of ‘Republic Day offer’, says a Bank of America Merrill Lynch report.
As per calculations done by the BoFA-ML analysts, per GB data will cost Rs 2.7 under the Jio’s Rs 448 and Rs 498 plans, under which the company will offer 2GB 4GB data per day and speed will reduce after the limit is consumed.
These plans have validity of 84 and 91 days, respectively.
Earlier, under the ‘Happy New Year offer’, Jio had reduced cost of data per GB to Rs 4.
“The new tariffs imply 25-33 per cent implied tariff cuts. This is the second “implied tariff” cut by Jio this month and signals Jio’s intention to continue to focus on sub additions until it reaches a particular scale. Jio also introduced a new plan for Rs 98 that provides access to 2G data per month this looks more like a feature phone offering,” the report said.
Jio’s closest rival Bharti Airtel data cost per GB has dropped to Rs 4 under its new schemes. The tariff of Rs 2.7 per GB data is about 99 per cent lower compared to Rs 249-259 per GB charged by established big operators till August 2016 — before commercial launch of Jio services.
Jio’s announcement of Republic Day scheme, under which users will get 500MB extra data per day across existing plans, within days of Airtel announcing the scheme priced at Rs 399 offering 1GB 4G data daily with 84 days validity.
“It is very logical to assume that, after Jio’s strong signalling at its analyst day, Airtel knew that Jio would follow up on any tariff cut. Despite this, Airtel launched these new offers. We believe that it is investing heavily to build a strong network that can sustain high traffic. We now see the market moving to 1.5GB per day plans from 1GB per day.
We find smaller telcos vulnerable in this “network capacity war,” BoFA ML report said. A Credit Suisse report said that in over the last three weeks, effective tariff, measured as Rs per GB daily allowance, would have come down by 40-50 per cent.
“In our earlier note, we had highlighted our concern that the Rs 149 plan could become the de facto ceiling on monthly spend for customers (thus limiting average revenue per user).
This was also alluded to by Bharti Airtel management on their earnings call that there is some room for ARPUs to decline further,” Credit Suisse report said.