As per a new report, the decision of Bharti Airtel to not bring its feature phone to compete with Reliance Jio’s JioPhone is hurting its chances of adding more subscribers to its existing subscriber base. By introducing a new affordable option for the previous users of the 2G network, Reliance Jio started a chain reaction for the consumers where more and more subscribers began migrating to the JioPhone and eventually to Jio’s 4G network. As a result, Airtel has already lost millions of subscribers to the Mukesh Ambani led telco, and it continues to lose more.
Airtel Hurting Its Own Chances: Analysts
Naveen Kulkarni, head of research at Reliance Securities, said in his statement to ET, “Airtel is unable to deal with JioPhone’s pricing challenge as it does not have similar subsidised 4G VoLTE feature phones on offer, and it’s unlikely to engage in any aggressive customer acquisition strategy involving doling out of handset subsidies before having a comparable 4G network like Jio’s.”
If we were to go by the words of analysts, then it is an uphill climb for the Sunil Bharti Mittal led telco since Airtel is yet to establish a 4G network in the country which compares in scale to Reliance Jio’s. It is no doubt that Reliance Jio currently handles a disproportionate amount of 4G consumers in the country. On top of that, the telco is also troubled by other problems like revenue pressure and profitability. In the last quarter ending September, Reliance Jio’s new Monsoon Hungama Offer wherein users could exchange their feature phones and buy a new JioPhone attracted a lot of traction from the masses. As a result, Reliance Jio added 37 million customers to its subscriber base, whereas Airtel lost 6.6 million subscribers.
As per the brokerage firm Goldman Sachs, the loss of customers for Airtel is because of JioPhone’s massive popularity and rationalisation of customers. The firm said in a statement, describing the problems of Airtel, “We estimate 15-20 million JioPhones were sold in the second quarter FY19, and if JioPhone traction remains strong, we could continue seeing pressure on Bharti’s revenues.”
Airtel to Not Introduce Its Own Feature Phone
However, Airtel remains adamant on its stance and is firm on the decision of not countering Reliance Jio’s VoLTE feature phone with a product of its own. Airtel CEO, Gopal Vittal voiced the same opinions as he said, “We have chosen not to compete in the VoLTE feature phone segment as we have feature phone users on our own network, and plan to get them to directly upgrade to smartphones.”
Airtel seems to be developing a counter-intuitive approach to compete with the JioPhone phenomenon. The company is more reluctant about people upgrading directly to smartphones. As such, Bharti Airtel is also offering Rs 2,000 worth of cash back to users who upgrade to smartphones from feature phones. The telco has also launched its ‘Mera Pehla 4G smartphone’ drive to better compete with Reliance Jio’s JioPhone.
However, Analysts are of the opinion that Airtel should be wary of its approach towards the issue since the feature phone using population has always been shy of migrating to smartphones because of affordability issues. Things have changed since the advent of JioPhone since now this population has access to video, social media apps and VoLTE grade voice calling facility in the same price range as a feature phone thus eliminating their need to migrate to a smartphone.
Rohan Dhamija, partner and head, India & Middle East at Analysys Mason also remarked on Jio’s move of subsidising the 4G feature phone has “sharply reduced the upfront cost of 4G devices in a much more significant way than the cashbacks being offered by Airtel.”