Why 5G services are crucial for India's Jio

It looks like India's largest service provider, Reliance Jio, needs 5G to boost average revenue per user (ARPU) and improve the quality of subscribers.

Over the past few months, the company has purged inactive accounts, which has helped it improve ARPU from INR144 ($1.93) at the end of the September 2021 quarter to INR167.6 ($2.16) in the March 2022 quarter.

As a result, during this time, Jio's subscriber base has come down from 424 million in September 2021, to 410 million at the end of the March 2022 quarter.

5G services are likely to be crucial for Jio to boost ARPU.
 (Source: Reuters/Alamy Stock Photo)
5G services are likely to be crucial for Jio to boost ARPU.
(Source: Reuters/Alamy Stock Photo)

The decrease was also caused by a tariff hike in December 2021, which led to SIM consolidation. This is beneficial for Jio as it now has a base of 94% active subscribers. Previously, the service provider had the largest base of inactive subscribers – 21% – as of March 2021.

In spite of this, Jio's ARPU continues to be considerably lower than Airtel's – INR178 ($2.29) in March 2022.

Immediate concerns

This is of particular concern as Jio shares consolidated ARPU for all services, including home broadband. This means its wireless ARPU is much lower than the number reported because JioFiber's ARPU is likely to be higher.

While the company initially focused on adding subscribers, this is no longer the case.

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Offering the lowest tariffs to acquire the biggest number of subscribers ensured that Jio was unable to attract consumers with deeper pockets, despite providing commercial 4G services before other players.

Typically, they are early adopters of any new technology - making premium services, preferably before other players, vital. So while Airtel defends its subscriber base, Jio will need to come up with compelling 5G products.

India will hold the long-awaited 5G spectrum auction in June 2022, with service providers likely to launch in August-September this year.

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— Gagandeep Kaur, contributing editor, special to Light Reading

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