Reliance Jio's new Rs 49 plan will help JioPhone gain market share in feature phone segment, especially in rural and Tier II city onward regions. The plan will also impact ARPU since users may migrate to the low tariff JioPhone, India Ratings and Research (Ind-Ra) said. "Feature phones are an attractive proposition for rural users, being economical and with limited and useful features. On an average, a feature phone user is likely to spend and continue its tariff plan since it is used primarily for calling and hence the ARPU is typically higher. Though the market share of smartphones is increasing gradually, feature phones still dominate in tier II, tier III cities and rural areas," the agency said in a statement.
Jio's new monthly tariff plan exclusive for JioPhone users will fasten its subscriber base growth, especially in Tier II cities and rural areas. While average revenue per user (ARPU) at the upper strata are capped Rs 300-Rs 400, there is a potential to improve them at the lower strata by data adoption in the unpenetrated segment.
Ind-Ra said that 65% mobile subscribers were voice-only subscribers in September 2017 according to Telecom Regulatory Authority of India. "As tariff wars spread to this segment to capture a significant market share, industry ARPU recovery could become more challenging," it added.
The new plan offers a tariff of as low as Rs 49 per month with unlimited voice calls and per day 1GB data validity of 28 days exclusively available with Jio Phone. This plan comes as a stark contrast with existing plans for incumbents who provide validity of just a day for 1GB data with zero talk time or only 300MB of data for the validity of 28 days.
Since the competition is far above the pricing level, Ind-Ra said that it believes Reliance Jio will increasingly add its subscriber share through its feature phone. However, the additions will likely be more in semi-urban and rural areas where the existing smartphone penetration level is lower along with data usage than in urban areas which are highly saturated.