Reliance Jio service impacted data consumption on top telcos’ networks, set to get 100 million users by March 2017

Reliance Jio’s 4G offering is gaining traction and it has already impacted data consumption on existing telcos’ networks. The Mukesh Ambani-led telecom operator is likely to see its subscriber base double by the end of this financial year, JP Morgan said in an analysis.

Reliance Jio has reportedly added over 67 million 4G users on its network with the help of free unlimited voice and 4G data services, coupled with digital content services. Jio’s free scheme launched in September 2016 has been extended till March 31, 2017

“Jio has gathered around 52 million subscribers as of December-end, and the expectation is to hit 100 million subscribers by March 2017, after which the company would start billing commercially,” JP Morgan said.

JP Morgan, in its report, said that over the last few months, as Jio’s free offering has gathered subscribers, and more importantly, impacted data consumption on existing telcos’ networks. It added that Jio’s free service has resulted in a pricing reaction from the top telecom operators—Bharti Airtel, Vodafone and Idea Cellular– for their existing telecom offering especially on data.

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The report also noted that there are some concerns on whether Reliance Jio’s tariff plans would be adjusted lower when the actual commercial operations are launched in April 2017. It added that Jio should seek to maximize average revenue per user, than pricing go for a per-GB data offer.

To that extent, the initial price scheme launched by Jio was a positive one as the effective pack started at Rs 499 per month, although there is a lower priced plan of Rs 149 per month, the agency said.

“However, given the way incumbents have cut tariff plans, it remains to be seen how Jio reacts from April, when commercial operations are launched and whether we see tweaks in the currently announced pricing plans or whether Jio sticks with the announced plan,” the agency said.

Also read: Reliance Jio Download Speeds Improved Drastically with Average Speed of 9Mbps, Shows TRAI Speed Test Report

JP Morgan also said that Jio could likely play the pricing game for longer, given the financial strength of Reliance Industries.

“But given that most incumbents are comfortably based on financial metrics, any pricing strategy will likely be matched and thus the market share gains would be limited for RJio,” it added.

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