JioPhone to Help Reverse Recent Decline in Industry Revenue: Fitch

Reliance Jio’s cheap 4G handset, JioPhone, is set to accelerate internet adoption in India and should help reverse the recent decline in telecoms industry revenue, Fitch Ratings said. The phone will also allow Jio to gain revenue market share as it allows the telco to attract first-time 4G users.

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Fitch said that Jio’s 4G handset is likely to quickly replace 2G handsets in rural areas, where smartphones had previously been out of reach for many potential customers. It will be available for a Rs. 1,500 deposit – which will be refundable after three years – compared with a price of at least USD60 for existing 4G smartphones. India’s internet-adoption rate is among the lowest in Asia-Pacific, owing largely to low smartphone affordability and a lack of fixed-broadband networks in rural areas. Around 95% of the country’s 422 million internet subscribers were wireless users as of end-March 2017, according to the Telecom Regulatory Authority of India (TRAI), and most of those access the internet through smartphones.

JioPhone would add 3%-4% (or around USD950 million) to annual industry revenue if adopted by at least 100 million subscribers, which appears likely, according to Fitch.

Industry-adjusted gross revenue is now likely to rise in 2018, after the quarterly industry revenue declined by 15.6% YoY to USD6.1 billion in the quarter ending March 2017. Growth will be driven by increased data consumption and a rise in average spending per user. The monthly tariff on Jio’s 4G phone of USD2.3 is more than 50% above the current average revenue per rural user, most of which are on 2G phones and consume minimal data.