Why Has Reliance Jio Come Up Another Round Of Freebies?

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Why Has Reliance Jio Come Up Another Round Of Freebies?

Mukesh Ambani-led Reliance Jio is spoiling the habits of Indian customers by offering them one lucrative deal after another. While the consumers stand to gain, it is also a reflection of Jio’s desperation to convert as many of its 100 mn subscribers to paid subscribers. The majority of Jio’s customers joined the network to avail free services offered by the company at the time of its launch in September 2016.

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Now Jio has come up with a new promotional offer on Jio Money application. As per the new plan, if a subscriber recharge using Jio Money App, he/she will get Rs 50 cashback. Besides if you recharge with that money using Jio Money App, you get another Rs 50 back. Thus in total, a subscriber will end up getting Rs 100 as cashback. In effect, this takes care of the Prime Membership plan of the subscriber.

The company launched free voice for life and free data for the first few months. It was only recently that Ambani had said in his address that Jio would start charging subscribers from April 1, 2017, onwards. In the same address, he had mentioned that the company would continue to come up with offers that will appeal to the Indian consumers.

Just to recap, Jio had launched Jio Prime which allows subscribers to continue using unlimited data till March 31, 2018, by giving Rs 303 per month. The company also launched a Rs 499 per month plan which offers 2GB of 4G data every data.

What is intriguing is why is Jio taking such initiatives (of offering an additional discount of Rs 100) when the company has acquired 100 mn subscribers in the first 170 days of the launch of services? The answer lies in the question. While it is easy to acquire customers by offering freebies, it is not easy to convert them into paid subscribers.

“Jio has likely been surprised by the way industry has responded. The incumbents, in their bid to protect their customer bases, have been rather quick to come up with offers that match those of RJio. The speed at which the M&A arrangement between Idea Cellular and Vodafone India has been worked out also signals the seriousness of the industry in this matter. RJio has obviously not missed out on the messages, which are loud and clear—that, converting the free users into paid subscribers is going to be more difficult than what appeared to be so far,” says Deepak Kumar, Founder Analyst, BusinessandMarket. Jio might be becoming slightly desperate to have ensured that the subscribers continue to stay on its network.

“With the ongoing freebies and offers from incumbents, RJio can no longer have those conversions at tariffs that were announced earlier. It must match what the competition is offering. At the moment, gaining a base of paid subscribers, no matter how much they pay initially, is important. If it is not able to gain on that front in a significant way, then it could send a wrong signal to the stock market, which its parent RIL can ill-afford at the moment,” Kumar adds.

Another issue is that after April 2017, Jio would need to show some revenue and this is possible only if subscribers stay on the network.

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