The Jio tariff hike everyone expected isn’t coming—yet
Jio and its closest rival Bharti Airtel Ltd recently scrapped entry-level plans to boost their average revenue per user (or Arpu, a key performance metric for telecom operators), triggering expectations that telecom operators will increase tariffs towards the end of the year or early 2026.
“We are encouraging consumers to consume more and happily pay more, but we have no immediate plans for tariff (hike),” Anshuman Thakur, head of strategy at Reliance Jio Infocomm, said during an earnings call with analysts.
Jio’s average monthly revenue per user increased by 1.2% in the September quarter ₹From 211.4 ₹According to the company, it stood at 208.8 at the end of June, as growth slowed due to promotional 5G offers.
Following Jio’s decision to drop its entry-level package, analysts expected it to both increase tariffs and focus on premium services to bridge the gap with Bharti Airtel, which leads the industry in terms of Arpu ( ₹250 at the end of June). Airtel is yet to announce its September quarter earnings.
“If Reliance were not to increase tariffs in the next few months, [year-on-year] Arpu growth for the March quarter is likely to be 4% (at least ₹214/subscriber),” JP Morgan analysts said in a note dated October 19. “Investors continue to expect Jio to increase telecom tariffs ahead of the proposed Reliance Jio IPO (likely by June 2026).”
Jio net added 8.3 million mobile subscribers in the September quarter, taking its subscriber base to 506.4 million. Jio had 234 million 5G subscribers at the end of September; This was an increase from 213 million in the previous June quarter. 5G now accounts for 50% of Jio’s total wireless traffic.
Key Takeaways
- Despite expectations of another price hike, Reliance Jio is keeping rates steady for now. The company aims to increase revenue by encouraging heavier data usage and expanding 5G services rather than charging users more upfront fees.
- Jio is accelerating fixed broadband deployment, adding over a million homes every month through both fiber and wireless connections. The company, which currently has 23 million subscribers, targets 100 million home broadband users to strengthen its digital ecosystem.
- Jio is partnering with its parent company’s new arm, Reliance Intelligence, to create AI-based products and services. While RI will develop core AI capabilities, Jio will deploy them across its platforms; This will enable faster innovation, cost savings and deeper integration across the Reliance ecosystem.
Leading tariff increases
When telecom operators increased tariffs in July 2024 after a gap of over two years, Reliance Jio took the lead with a price increase of 12-25%.
However, while Airtel and Vodafone Idea Ltd have expressed the need to increase tariffs to increase return on capital employed (RoCE, a measure of profitability and efficiency), Jio has refrained from talking openly about increasing tariffs.
“We (the industry) are operating with the lowest Arpus and the lowest rate per gigabyte. But you still have to make money,” Gopal Vittal, managing director and vice-chairman of Bharti Airtel, said at an industry event earlier this month, adding that there was room to increase telecom tariffs.
In fact, Vittal had earlier called for changes in the telecom tariff structure by reducing data allocations in some telecom packages and charging for more data.
Analysts at Antique Stock Broking said in an Oct. 19 note: “While RIL (Reliance Industries) is noncommittal on possible tariff hike, management has other tools like unlimited 5G plate ramp-up etc. to support Arpu growth along with accelerated deployment of FTTH (fibre-to-the-home)/FWA (fixed wireless access) services.” stated.”
Jio’s broadband focus
Jio said in its earnings call last week that it was looking to add more home broadband subscribers at a faster pace. It added more than 1 million new homes each month in the July-September quarter, bringing the total number of fixed broadband connections to 23 million.
Jio has set a target of 100 million home broadband customers, without a specific timeline.
“The rate of connecting new homes is increasing and the technology is working well,” Thakur told analysts during the call. “A lot of these new connections are done wirelessly, and so the implementation itself is simpler, faster, and we expect we can increase that quite significantly from where we are today.”
Jio is leveraging license-free band radio technology (5G Air Fiber and fiber route) to provide broadband internet at home.
Reliance Intelligence and Jio
In August, Reliance Industries chairman and chief executive Mukesh Ambani launched Reliance Intelligence, the company’s artificial intelligence arm, and announced the expansion of partnerships with shareholders Google and Meta Platforms for AI applications and services.
On Jio’s parent company Jio Platforms Ltd’s role in this arrangement, Thakur said: “Jio will develop its own products and work with Reliance Intelligence to bring its solutions to the market.”
Jio Platforms houses Reliance Industries’ telecom and digital services business. Reliance Jio Infocomm is a subsidiary of Jio Platforms, which does most of its business.
Thakur explained that Reliance Intelligence will develop and invest in AI products, adding that this will require a lot of infrastructure and computing needs such as graphics processing units (GPUs).
“Reliance Intelligence is not currently looking at making its own LLMs (large language models), but is looking at AI-based products and solutions using its own infrastructure, its own people and its own capabilities,” Thakur said.
While Jio has a clear slate to work with companies like OpenAI, Meta and Google, Reliance Intelligence will compete with these global tech giants, he said.
“This dual structure of RI (Reliance Intelligence) developing core AI capabilities and Jio leveraging them across its platforms enables lower investment needs, stronger integration and long-term cost efficiencies, positioning Reliance to monetize enterprise AI workloads and India-specific digital services in the coming years,” Antique Stock Broking analysts wrote in their note. he said.
Jio Platforms reports 12.8% YoY growth in net profit ₹7,375 crore for the September quarter. Revenue from operations increased by 14.6% ₹36,332 crore.
