Why Reliance Jio’s move to hike voice call tariffs is good news for other telecom players

Reliance Jio’s decision to collect six paise a minute from its mobile users for calls made to subscribers of another network could be the good news telecom sector has been waiting for a while.

When Reliance Jio launched its services, it had announced that all voice calls will be given for free. This had put tremendous pressure on the incumbent players who were charging around Re 1 a minute, and most of its revenues were coming from voice calls. Following Jio’s entry, profit margins of the incumbent operators crashed drastically.

The latest announcement by Jio to increase tariffs from zero to six paise a minute may not do much in terms of giving elbow room for incumbent players to increase tariffs immediately, but it improves sentiments for the industry. It also enhances margins for Reliance Jio.