Reliance Jio is positively making lives of other telecom companies more difficult

Even though Reliance Jio (RJio) has less than 2 crore customers in a country with nearly 100 crore mobile connections, it has managed to make lives of established telecom companies difficult.

Analysts from Information and Credit Rating Agency (ICRA), Sabyasachi Majumdar, Harshal Jagnani, Ankit Jain and Sachin Sachdeva on Wednesday said, “Service levels are critical given the high competitive intensity, exacerbated by entry of RJio.”

With a high capex and low pricing power of the telecoms thanks to RJio, the analysts stressed pressures on realisation, which made the credit rating agency give a negative outlook for the cashflows into the sector.

Moreover, the Average Revenue Per User (ARPU) earned by Airtel, Idea, Vodafone and Reliance Communications has decreased over the previous quarters with a severe decline in voice revolutions per minute (RPM) in the first quarter, the analysts said.

These telecom companies had shaky second quarter as RJio put pressure on their revenue growth and brought down their ARPU and minutes of usage (MOU) considerably, a report by Economic Times said.