Reliance Jio’s decision to charge 6 paise per minute for outgoing calls to other networks had a massive impact on consumer behavior, according to indications from Bharti Airtel’s numbers and management commentary.
Jio had, on October 9, announced that it was withdrawing all plans that came with free minutes to non-Jio networks, and from then on, consumers would have to pay separately for off-network calls to Bharti Airtel, Vodafone Idea and so on. This was prompted by a decision by the telecom regulator not to withdraw mobile termination charges.
Jio partially rolled back its decision on October 21, and started allowing subscribers to make free outgoing calls to other networks subject to a limit of around 1,000 minutes per month in most cases.
Unlike other countries, nearly all 4G users in India have dual-SIM phones. One of the slots is almost always dedicated to Jio, while the other is home to a SIM from a rival operator like Airtel, Vodafone Idea or BSNL.
As such, even this brief disruption was enough to prompt an estimated 13 million (1.3 cr) customers to choose the Airtel SIM when they next did their unlimited recharge, instead of going with Jio as usual.
This is borne out by a huge spurt in 4G plan activations seen on Bharti Airtel’s network during October-December period. For the last couple of years, Airtel has been adding a steady stream of 2-3 million new 4G customers per month.
However, for the three months from October 1 to December 31, Airtel added a whopping 21 million 4G data customers — or an average of 7 million per month.
Airtel CEO Gopal Vittal indicated that the sudden spurt was related to Jio’s decision to stop offering bundled calls to other networks for those who recharged between October 9 and October 21.
“October-November was the period when there was..a change dynamic, given the charging that one of our competitors has imposed the off-net pricing,” Vittal told investors in a post-results interaction when asked about the sudden spurt in 4G users.
However, Jio corrected course 12 days, and again started offering bundled off-net calls with its unlimited recharges. For example, the company unveiled a Rs 444 plan that came with 1,000 minutes of off-net calls.
The new plans seemed to have arrested the flow of 4G users to Airtel, going by what Vittal said.
“Since then it has kind of settled, and has gone back to an even keel, and from here, we are driving the business in the same way as we have been,” he said, when asked if new 4G subscriber additions have settled back to their previous pace, or continues to remain elevated.
The behavior of consumers was also reflected in Jio’s numbers for the three month period from October to December. The company saw a 5.4% decline in the average data consumed by a subscriber compared to the previous three months, while subscriber additions fell 38%.
The sharp increase in 4G activation on Airtel indicate two things: 1) Consumers are extremely sensitive to even a small change in price, and 2) they have very little brand loyalty and will switch between providers at the slightest of provocations.
At present, Jio’s tariffs are about 15% cheaper than that of its rivals, which continues to give it the edge in an extremely price-sensitive market.
Most Jio plans today come with 1,000 minutes of calls to non-Jio networks per month. Airtel, on the other hand, claims that its packages offer “truly unlimited” calls.