Telecom industry loses 20% revenue due to JioTop Stories

February 18, 2017 16:36
Telecom industry loses 20% revenue due to Jio

The telecom industry in India has lost about 20% of revenue due to Reliance Jio’s free service, according to India Rating and Research (Ind-Ra) a Fitch group company has said, revising the sectoral outlook for 2017-18, Ind-Ra said the revision of the outlook on the sector to negative for 2017-18 from stable-to-negative for 2016-17 is due to “increasing competition”.

Its latest report on corporate outlook said “The negative outlook reflects Ind-Ra’s expectation of longer and deeper than expected deterioration in the credit profile of telecoms following the extended free services by Reliance Jio Infocomm.

The report further added that the industry has lost about 20% revenues due to the Reliance Jio’s offer. ““The existing telecoms would lose market share to Reliance Jio and suffer profitability while the debt burden will increase due to spectrum and network-related capital expenditure.”

Despite of the high volumes, decrease in data tariffs will hugely pull down the average revenue per user while voice revenue remains at risk due to Reliance Jio’s pricing strategy after its offer period ends.

“A decline in data tariffs by 20-30 per cent will pull down average revenue per user “the report said.

On September 5th last year Reliance launched its telecom service, offering consumers free services. Just before its 90 day welcome offer. The company announced that it has extended its offer to further three months

The incumbent operators have alleged that the Reliance’s free offer is affecting the whole telecom industry. Bharti Airtel country’s largest telecom service reported its lowest profit in four years in the third quarter of 2016-17 as demonetization and intense completion from incoming from the Jio hit its revenue.

The report also said the free cash flows will be negative due to the double whammy of weaker earnings and apex.

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Mukesh Ambani  Airtel  India  Reliance Jio