Reliance Jio's Rs 49 Recharge Plan May Attack Competition's 2G Base

1. Reliance Jio's Rs 49 recharge plan may attack competition's 2G base Reliance Jio Infocomm Ltd on Thursday announced that JioPhone users will enjoy free voice calls and unlimited data (1GB at high speed) for 28 days at a price of only Rs 49. This new plan is expected to deal a large blow to competitors who are already reeling under heavy losses as they try to aggressively match Jio’s prices. “With Jio’s share of the 4G market above 50%, we believe Bharti and others will likely remain aggressive on prices to stem further market share losses,” a UBS telecom analyst had noted prior to the launch of this new plan. UBS had also noted that with its own 160.1 million 4G subscribers at average revenue per user (ARPU) of Rs 154, any price / ARPU cut has an equally big impact on Jio’s own revenues as other telcos who have already seen a large part of the ARPU erosion play out. While 4G contributes 25-35% of revenues for other operators, implying any price cut in the 4G space would have a disproportionately

2. bigger impact on Jio’s revenues, while the 2G / feature phone segment remains largely immune to these price changes. However, given that the feature phone users are predominantly 2G users, this plan is likely to hit the operators at their weakest point. Currently, Airtel's ARPU has fallen to Rs 123 and while Idea stands at Rs 114. JioPhone is the 4G VoLTE enabled feature phone launched by the company to push VoLTE usage in the ultra-low budget phone category in October last year. The phone costs is effectively “free” as it retails for a refundable security deposit of Rs 1500. According to a Counterpoint report shared with Economic Times, currently has 27 per cent share in the feature phone market following over 15 million handsets shipped until December. The company is gearing up to launch the next round of JioPhone shipments soon. JioPhone has currently surpassed Samsung in the feature phone market which has less than 20 per cent share. “ Currently, they can neither afford even the cheapest 4G LTE smartphone, nor the exorbitant cost of data and voice charged for 2G services. Jio has made data affordable for everyone,” said Jio in note. This is the third revised pricing plan in January from Jio although this the first JipPhone specific plan. Lower priced entry recharges are meant to take data connectivity to a wider audience in line with Jio’s plans to reach 50 million subscribers. Jio is also introducing data add-ons at Rs 11, 21, 51 and 101. A recent report by Cyber Media Research, Jio's entry in the telecom market has hastened the decline of 2G usage and by first quarter of 2020 India would have zero 2G subscribers. Article By - Business Standard