Reliance Jio freebies cost telecom sector Rs 8240 crore in incremental revenue?

Key Highlights

• Industry adjusted gross revenue fell by 4.9% to Rs 1.4 lakh crore.
• The top three operators’ AGR declined 15.2% YoY while incremental revenues of the industry fell by Rs 8240 crore.
• Jio’s interconnection bill was at Rs 1500 crore in Q4 alone

Even as the battle between Reliance Jio and the rest of the telecom sector rages from issues like spectrum payments to 'freebies', it seems Mukesh Ambani's newest telecom venture has achieved what it set out to -- disrupt the market.

For the past two quarters, telecom companies like Vodafone India, Bharti Airtel and Idea Cellular have lamented over the newest entrant in the telecom sector and its predatory pricing, among other cries.  
 
While mobile phone subscribers have made the best of the free services and discounts offered by the operators for the past nine months it has burned a deep hole in the industry’s pockets. 
 
Adjusted gross revenues (AGR) for the last quarter of financial year 2017 fell by 17% to Rs 30,900 crore, Kotak Securities said in a report dated June 8. 

Sanjesh Jain, analyst of ICICI Securities said, “The telecom industry’s FY17 AGR fell 4.9% to Rs 1,404 billion (Rs 1.4 lakh crore) due to intense competition unleashed by Reliance Jio.”  

This, the report said was due to lower revenue per user brought in by the operators. AGR ARPU dropped 13.6% in FY17 to Rs 106.
 
ARPU is average revenue per user, or, the amount of money spent by each customer on their telecom plan every month. 

Not including AGR, the report showed telecom industry's ARPU dropped 30.3% as against the same period of last year and 18.5% when compared against the preceding quarter. 
 
Telecom major Bharti Airtel’s ARPU was down 21.1% YoY to Rs 128 in Q4 per user; while Vodafone and Idea were at Rs117 and Rs 111 respectively.
 
RJio’s total subscriber base stood at Rs 10.89 crore on March 31.
 
Also Read: Reliance Jio added 11 crore subscribers to its network in FY17
 
The ICICI report showed how post RJio’s launch, all operators reported a drop in ‘incremental AGR’ which fell by Rs 8,240 crore (Rs 82.4 billion) in Q4 on a year-on-year basis.

 The top three operators’ AGR declined 15.2% YoY, ICICI report said.

Also Read: Delay in plans to offset debt led telecom industry to crisis