JioPhone Not as Disruptive as Feared, Target Base Limited: Analysts

By July 25th, 2017 AT 7:04 AM

Investment banking firm Jefferies said the pricing of JioPhone and the plan is not as disruptive as feared, but it will still be able to pose a stiff challenge to incumbents to protect their subscriber market share. JioPhone, which was introduced last week, is priced at Rs. 1500 and will be available in September this year. The price for this phone will be collected as a fully refundable deposit, refundable at the end of three years.

reliance-jiophone-2

Brokerage firm Goldman Sachs Equity Research, in its report, said that JioPhone’s target audience is likely to be fairly small. The target audience primarily comprises customers that pay more than Rs100 per month and buy feature phones that are more than Rs. 1,000.

Reliance Jio has also announced a monthly plan for Rs. 153 with the device to offer unlimited voice/SMS and 0.5GB of data per day. Further, it announced two sachet plans for Rs. 24 and Rs. 54 with the validity of two and seven days respectively.

Jefferies said that Jio’s monthly plan for the new phone compares favourably against the blended average revenue per unit or ARPU of top three incumbents, but it does provide a cap.

“Even though the pricing is not as disruptive as feared, it will still be a stiff challenge to incumbents to protect their subscriber market share…We believe that the pricing on both devices as well as the plan is not as bad as feared for incumbents. While refundable, the cost of acquiring the device is not game changing when compared against existing feature phone prices. The Rs. 153/month plan to compares favourably against the Rs. 142-158 ARPU across Top-3 but does create a cap,” Jefferies added.

Goldman Sachs further said ARPU for most feature phone users in India is less than Rs. 100 and according to Vodafone India, 70% of the feature phone users have an ARPU of less than Rs. 50. However, Jio’s new offering is priced at Rs. 153 for 28 days, coupled with one-time payment of Rs. 1500.

Jefferies said that the new offering would lead to ARPU splicing/erosion in higher ARPU subscription and subscriber churn for incumbent telecom operators in India.

The firm added that incumbent telecom operators would struggle to compete against Reliance Jio in rural areas that JioPhone targets primarily. It said that Jio would increase its 4G coverage in these areas to support the quick proliferation of JioPhone, given that the phone’s main offering is voice, which is based on VoLTE.

“Incumbents would have to accelerate their 4G network spending to match up to this,” the report added.

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[…] is soon going to launch the much talked-about JioPhone, a budget 4G VoLTE feature phone in India. The phone is expected to support all native Jio […]

Faraz
Faraz

Don’t worry.
Ambani Ji will come with welcome offer offering 3 months in first recharge in JioPhone. And then a surprise offer offering again for two months in recharge of Rs.153 second time. Strategy of DDD

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