'Jio's new phone to raise its market share; negative for Airtel, Idea'
Reliance Jio on Monday launched the 4G-enabled phone costing only Rs 999 per unit, the lowest entry price for an internet-enabled mobile phone.
NEW DELHI: The launch of the low-cost 'Jio Bharat' smartphone by Reliance Jio is expected to raise the telecom major's market share at the lower end of the market, said JP Morgan. In a report titled 'India Telecom', JP Morgan said 'Jio Bharat' is likely to disrupt the bottom of the pyramid.
Reliance Jio on Monday launched the 4G-enabled phone costing only Rs 999 per unit, the lowest entry price for an internet-enabled mobile phone. A recharge of Rs 123 per month will provide users with unlimited voice calls and 14 GB data, compared to other operators' Rs 179 plan for voice calls and only 2 GB data.
Jio said India still has 250 million mobile subscribers trapped in the 2G era with feature phones. These feature phones do not provide internet access, especially when access to technology is a necessity which also uplifts one's livelihood and economic well-being.
Jio Bharat is being launched with the objective of empowering every Indian with the power of digital services, especially those who cannot afford a smartphone, Jio said in a release. Beta trial for the first 1 million Jio Bharat phones will begin on July 7. The phone comes with inbuilt apps such as JioSaavn and Jio Cinema. It also offers UPI through Jio Pay.
"This disruptive step can halt incremental tariff increases for 2G and help JIO gain share in that segment. Jio already had become aggressive at the premium end in Mar'23 through aggressive postpaid plans in addition to fiber pricing.
We think this is negative for both UW rated Bharti and IDEA given returning disruption and tariff aggression at the bottom of the pyramid and signals lack of support for 4G tariff actions," JP Morgan said in the report. "We believe with this phone Jio can take market share at the lower end of the market.
This also puts Bharti at risk as it can see increased churn from its recent 2G price action of increasing the Rs99 plan to Rs155 plan," said the JP Morgan report. Jio, the report said, already had become aggressive at the premium end of subscribers in March 2023 through aggressive postpaid plan launch and now the phone launch event showcases its aggressiveness towards the lower end of the spectrum as well.
JP Morgan said the new announcement would be negative for both competitors Bharti Airtel and Vodafone Idea. "We think this is negative for both UW rated Bharti and Idea given returning disruption and tariff aggression at the bottom of the pyramid and signals lack of support for 4G tariff actions," the report added.