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Read more about Reliance Jio\'s Rs 49 recharge plan may attack competition\'s 2G base on Business Standard. 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
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
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