Reliance Jio’s Rs 500 4G Phone to Target 150 Million Feature Phone Users in India: CLSA

Reliance Jio’s upcoming 4G feature phone will target 150 million feature phone users that are likely to have average revenue per user (ARPU) of Rs150-180 and contribute to 15-17% of industry revenues. These 150 million feature phone users and replacement market of feature phones at the margin would be the twin target markets for Jio’s 4G feature phone, according to a report by CLSA.

Reliance-Jio-tribunal

In India, features phones still outsell smartphones with total feature phone shipments at 136 million vs. smartphone shipments of 113 million in FY17. “Our industry checks indicate that there are ~500m feature phone users in India mobile, however, 70% of these have ARPU of Rs. 50 monthly or lower,” CLSA said

Jio, which has just started charging for its services full-fledged, is currently seeing a moderation in subscriber additions as it hits the 4G device hurdle with penetration in 4G devices at 85%.

“Our channel checks indicate that a 4G feature phone launch by Jio is imminent and this phone though locked to the network will have VoLTE and suite of data applications. Despite being superior to currently available feature phones, there is a possibility that Jio could offer their feature phone at Rs500-1,000,” CLSA said in its note.

With the price of feature phones ranging between Rs. 500-2500, this potential offer from Jio will be aggressive and could likely lead to mass adoption. CLSA added that its channel checks also point to promotional tariffs bundled with a 4G feature phone.

Jio’s feature phone is likely to cost about Rs. 1,000-1,500, implying a subsidy of Rs500-1,000 per device if it is offered at Rs500-1,000. “Assuming a subsidy of Rs500, incremental 100 million devices sold would result in total subsidy bill of Rs50 billion, which can in part be offset by lower interconnect costs as higher subscriber market share will also drive higher share of on-net calls,” CLSA said.

Jio’s interconnect costs for 7MFY17 stood at Rs. 26 billion, implying a full year cost of Rs 46 billion, 35% higher than Rs34bn interconnect costs of Idea Cellular.

jio mobile Rs 999

CLSA said that additional 100 million subscribers would boost Jio’s subscriber market share to 19-20%, higher than Idea Cellular, driving interconnect savings of Rs10-12 billion annually.

According to the agency, the contraction in industry revenues has been widely due to ARPU dilution at the top-end of the subscribers (15% of subscribers, 40% of revenues) which use 4G smartphones and MiFi devices. However, the launch and promotional offers of 4G feature phone by Jio could potentially lead to ARPU dilution among the mid-ARPU subscribers which form ~21% of total subscribers and ~22% of sector revenues.

Meanwhile, with the initial 3-month promotional period of Jio’s “Dhan Dhana Dan” offer ending on 15th July, the industry revenue outlook will also depend heavily on when Jio starts charging the full tariffs to its existing subscriber base.

“While our dealer checks indicate that promotions for Jio’s existing subscribers may end, implying relief for incumbents, further promotions can’t be ruled out. We expect sector revenues to fall by 7% YoY in FY18 led by promotions and retaliatory tariffs and expect a rebound in FY19 only on Jio turning fully pay,” CLSA said.

Passionately following the Indian #Telecom Industry for over a decade from Business, Consumer and a Technical perspective. My primary focus area is Consumer & Digital Experience.

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Kirti Khurana
Kirti Khurana

Bad days for Jio ahead Airtel giving 84 GB data for 84 days @ ?293 only for new sims
people will throw fake Jio 4G no. & will but airtel
jio subs base will be below 70 million

Speed
Speed

Yes, hobisly

Rs293 daily 1GB
Good
Make it reality
Make ur words true
I am happy to take that offer………

Kirti Khurana
Kirti Khurana

check sim distributors, usually here in Delhi they stand in road sides or in the market places with their kiosks.

images.jpg
Kunal
Kunal

293 voucher gives daily 1gb for 84 days & only airtel to airtel free calling . All other calls are chargeble & also roaming outgoing extra.

Sandy
Sandy

Bhai its still costly than jio. 449 vs 399.

Arena
Arena

Airtel must advertise that openly for all.

Jio lover
Jio lover

Which circle?

Respond2aji
Respond2aji

And you will use that under patchy 4g network?! That’s not gonna cut it.

Kirti Khurana
Kirti Khurana

at least airtel gives me guaranteed 2 mbps speed even their 3G in my place gives upto 12 mbps in daytime.
where Jio lower bands wont go beyond 0.5 mbps everywhere in Delhi.

Arena
Arena

Don’t compare each time referring jio only. I don’t get proper Airtel 2g/3g….flactuates and black in Banglore, ap, Chennai.. be happy with what each get good. I get good jio in Banglore, bad outside,in Ap good outside, bad inside., Chennai varies place to place, Mumbai it’s good.

Be thankful to jio for data offers.. some here gets 75+ Mbps, it’s just they are lucky. Some like you,me sudhakar gets unreliable. It hurts,but nothing can be done.

Only 2 options left….all existing become optically backed, or usage like now must die.

Chandu
Chandu

only for new customers ?

Kirti Khurana
Kirti Khurana

hmm as of now this is frc only i believe.

Harsh
Harsh

Yess but this is frc i wish they’d come up with 84 days offer to old users too btw 70 gb offer still showing on my no. for Rs244 will go between any of these two when Jio plan expires late this month.

Kirti Khurana
Kirti Khurana

haha what bothers having a second spare sim alongside if they’re giving such offer Enjoy!

Speed
Speed

@ sudhakar Wait till December Jio promise of coverage will be full filled. Like what doing in recharge plans… I think Bsnl position is 5th in subscribers base Indians know HOW TO MEASURE Quality and coverage… In this both aspects DID BSNL is super Then y the reason SUBSCRIBERS BASE AIRTEL 270 Voda 209 Idea 196 Jio the small 112 BSNL. 101. —————- Y ITS POSITION IS HERE… If u say indians are fool’s including me using PRIVATE OPERATORS … THEN BSNL IS TOP TOP NOTCH SUPER U have to menshon Y WE INDIANS KEEP SIM OF BSNL ON OUR… Read more »

SonuSB
SonuSB

He won’t face you. As now he has no answer against all your queries and questions. But really surprise to see that now finally Sudhakar is going away from someone.

Speed
Speed

@sonuSB

I will report this comment once more……
In coming days…..

Bcz i think
Today with so many posts
He missed this comment………

Bcz he is the MAIN BONE OF BSNL
saying
South India , North india

Im the FRUSTRATED INDIAN irrespective of north and south…………

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