Jio Set to Charge from Apr 1, But Won’t Pinch
Existing benefits will continue for one-time fee of .₹ 99 and .₹ 303 a month; telco promises to better rivals’ offers
Mumbai: India’s mobile-telephony companies are headed for a fresh round of price wars after the country’s richest man said his carrier, Reliance Jio Infocomm, will charge its subscribers from April 1, but at sharply discounted rates.
After six months of offering all services for free, a plan that helped Reliance Jio net 100 million subscribers in a record time, chairman Mukesh Ambani on Tuesday said that Reliance Jio would not levy fees on calls. For the next financial year beginning April 1, the company’s existing users and those coming on board this March will continue to get 1 GB of data a day and all of Reliance Jio’s apps for .₹ 303 a month and a one-time cost of .₹ 99. By contrast, market leader Bharti Airtel offers unlimited calls and 1GB of 4G data at .₹ 345 for 28 days. Launches with a membership fee of 99 Jio Prime members will pay for unlimited services till March 31, 2018 Jio to match tariff plans of other telcos & offer Analysts say move will intensify competition & lead to price wars
Airtel also offers 30GB of data for 90 days at .₹ 1,495. For .₹ 349, Bharti’s nearest rival Vodafone offers unlimited calls and 50 MB of 3G or 1GB of 4G data, also for 28 days.
Reliance Jio on Tuesday said those who join as subscribers after March 31 will pay according to the subscription plans that range from .₹ 149 to .₹ 4,999. “Data is the oxygen of digital life and it is our promise that Jio will provide world-class quality and quantity of data, at prices that are affordable to all Indians,” Ambani said in a speech shown live on Reliance Industries’ social media accounts. Reliance Industries is the carrier’s parent company.
The start of paid services from Reliance Jio comes amidst a bitter industry spat — now before various legal fora — with incumbent companies accusing the new entrant of violating rules by offering voice for free and not charging customers beyond the mandated 90-day period. Mukesh Ambani’s company has denied the allegations, saying all its plans have been cleared by the telecom regulator. “These announcements mean continuation of the price war. Incumbents who would have assumed significant return of subscribers or increased usage of data on their network post March 31, may find it (the assumption) thwarted,” said Amresh Nandan, research director for Gartner.
Ambani said the raft of competing offers by rivals had confused users. “These plans have created a lot of confusion in the market… and customers are having what I call data and value anxiety… whether they are getting the best value for the price that they are paying,” he said. Hence, Reliance Jio would monitor all announced plans. “And we will not only match the highest selling tariffs of each of the other leading Indian telecom operators… but we will provide 20% more data in each of these plans,” he said.
FOCUS ON HIGH-END USERS
Experts say Reliance Jio is seeking to lock in users at ₹ 303 a month, and is targeting the bigger data subscribers who spend at least ₹ 700 a month at rivals. A research analyst at an international brokerage firm said Idea, Vodafone and Bharti Airtel could see their high-end subscribers port to Reliance Jio. “About 70% of revenues come from 30% of the customers. They could now shift to the .₹ 303 monthly plan and get all the benefits,” said the analyst, who did not want to be named.
After Reliance Jio’s announcement, shares of market leader Bharti Airtel closed at ₹ 360.55, down 4.02%, while Idea Cellular closed at .₹ 108.30, down 0.37%, off intraday lows of 106.65, on BSE. The company, which had seven customers join it every second since September 5, disrupted the Indian telecom industry with its ‘Welcome’ and ‘Happy New Year’ offers that promised free voice and data services. After Reliance Jio’s entry, Bharti Airtel’s profit plunged 55% in the third quarter, Vodafone India’s on-year service revenue fell 1.9%, while Idea posted its first ever loss since listing in 2007.
“One would have expected different kinds of offers (for example bundling with other Reliance Jio products) or some sort of gua- rantee in service experience. However, that’s not the case so far. This means the market will continue to fight on price compared to quality, at least in near future,” said Nandan. Ambani noted that there were lakhs of subscribers who had switched loyalties and ported their numbers to the Reliance Jio network.
PRICE POINT TO COMPETE
To be sure, the introduction of a subscription fee is still a relief to the incumbent companies that now have a tangible price point around which to build their service packages unlike in the past where, as analysts said, they were practically shooting in the dark.
Rajan S Mathews, director general, Cellular Operators Association of India, said paid services would mean that “consumer cho- ice and preferences will now be revealed in the marketplace.”
Reliance Jio’s latest plans would force rivals to cut data rates and take further bottom line hits, as investments would need to continue. “Further capex investments by incumbents will need financial strength,” said Jaideep Ghosh, partner and chief operating officer at KPMG.
Ambani said Reliance Jio users consumed more than100 crore GB of data per month, translating into 3.3 crore GB a day — about as much mobile data consumed by the US and about 50% more mobile data than all of China.
He added that Reliance Jio will more than double its data capacity to better serve its customers, and to make the network faster and stronger. “By the end of 2017, Reliance Jio will cover 99% of the country’s population,” Ambani said. He added that the carrier has more than double the number of 4G base stations compared to all the 4G sites of its rivals.
The 4G telecom operator that rolled out services six years after inception has been steadily getting money from the parent group. In January, Reliance Industries invested .₹ 30,000 crore to fuel its digital expansion and enhance network coverage and capacity. This is in addition to the .₹ 1.71lakh crore the group has already invested in the telecom arm so far.
Ambani noted that there were lakhs of subscribers who had switched loyalties and ported their numbers to the Reliance Jio network
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