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

The Economic Times - - Front Page - Our Bu­reau

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.


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.


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

Jio crosses cus­tomer mark Telco has added since its launch


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