Reliance Jio may roll out much cheaper products to capture the market share from incumbents–Airtel, Vodafone and Idea–as soon as possible, according to Fitch Ratings, which expects the 4G player to launch commercial services in the second half of this year.
“When they [Jio] launch, their products will be cheaper than what the incumbents are offering right now. That will be their strategy to capture or snatch away the market share from incumbents as soon as possible because it is a crowded market and they will have to launch a better product at a cheaper pricing to force consumers to turn out from the incumbent networks to their network,” Fitch Ratings’ Nitin Soni told ET Now.
Upon the launch of Jio services, the data pricing will decline going forward, affecting the margins of the incumbents, according to the ratings firm.
While the short-term strategy will be focused on acquiring customers with cheap pricing, Soni reckons that Jio will have to raise tariff in the medium term. So hopefully, now they will launch and once they launch, we expect the data pricing to decline going forward, affecting the margins of the incumbents.
According to him, at such cheaper prices, it will be very difficult for Reliance Jio to earn a sufficient return on their investment which is a massive investment of $18-19 billion.
Global financial services firm UBS had earlier said that Jio is likely to soft launch 4G LTE services in the country by the end of this month, while the full commercial offering was expected by December.
Jio’s 4G SIM have been shipped to the retail outlets, however they are not yet available for sale “At present, Jio SIM cards are only available to Reliance employees, post its beta launch in December 2015,” UBS added. UBS said that its speed test on trial SIM cards in Reliance outlets indicate network speed of 18-20 Mbps versus Vodafone’s 4G speed of 8-10 Mbps.