Why Subscriber base of Reliance Jio Decreased?
Recently, Reliance Jio announced their Q2 FY22 results. There was something significant in it for all the investors and other stakeholders. JIO reported a significant increase of 23% in its revenue and also in ARPU (Average Revenue Per User). Despite of this increase, there was one surprising element that was never seen in case of JIO.
In telecom companies, there are two types of users, total number of users and active users. Active Users are those who pay for services regularly, where as the total users include both active as well as inactive users. ARPU is actually calculated by dividing total revenue by total number of users.
Since its starting in 2016, Jio's customer base used to increase every quarter. This is the first time when JIO's total customer base decreased by 1.1 crore. Everyone's wondering about this drastic decrease. The reason behind this was that Reliance JIO has a total customer base of around 44 crores, which is the highest in the country. But from this, only 80% customers are active, which is the lowest in the country (Airtel with 98% and VI with 87%). Hence, in order to improve their ARPU level, JIO removed some of the inactive customers. This is exactly what happened in the latest quarterly results. Still, they have a lot to improve on this parameter.