Rate hikes for 5G monetisation to push Jio, Airtel ARPU by 16-17%: Analysts

India’s largest telecom company Reliance Jio has taken the lead in monetising 5G services by driving a 46% increase in prices for 5G users, marking a sharp shift in its strategy towards premiumisation rather than subscriber addition, market experts said.

Morgan Stanley estimates that Jio and Bharti Airtel would record a blended ARPU (average revenue per user) benefit of 16-17%.

According to Axis Capital tariff-to-ARPU transmission could be between 50-70%.

“..its focus has shifted from share gains to monetization,” brokerage firm JP Morgan said in its stock update. “Jio premiumised 5G access by increasing the threshold for unlimited 5G data to >2GB/day plans from 1.5GB/day plans that effectively drives a 46% increase in tariffs for 5G users, 2x the overall hikes driving 5G monetization.”

India’s largest telecom company Reliance Jio has taken the lead in monetising 5G services by driving a 46% increase in prices for 5G users, marking a sharp shift in its strategy towards premiumisation rather than subscriber addition, market experts said.

Morgan Stanley estimates that Jio and Bharti Airtel would record a blended ARPU (average revenue per user) benefit of 16-17%.

According to Axis Capital tariff-to-ARPU transmission could be between 50-70%.

“..its focus has shifted from share gains to monetization,” brokerage firm JP Morgan said in its stock update. “Jio premiumised 5G access by increasing the threshold for unlimited 5G data to >2GB/day plans from 1.5GB/day plans that effectively drives a 46% increase in tariffs for 5G users, 2x the overall hikes driving 5G monetization.”

Therefore, we believe Jio’s continues to focus on further subscriber additions, it added.

This round of tariff hikes by telecom companies is unlikely to cause large SIM consolidation, Bank of America (BofA) Securities said.

“Historically we have seen some SIM consolidation and negative elasticity impact post tariff hikes. While anticipate a similar negative impact this time as well, we think the magnitude of the impact may be lower this time around. This is because the larger part of SIM consolidation is already behind us and data is getting sticky such that consumers may not downgrade as much,” it said.

Reliance Jio on Thursday announced new tariff plans which will be effective from July 3, 2024. The new prepaid tariff plans are 13%-25% higher versus previous plans, postpaid plans are 13-17% higher, and the add-on data plans are 13%-27% more expensive.