Jio aims to gain market & revenue share by launching 4G feature phone

To be launched on July 7, JioBharat 4G V2 phone, as it is known, is priced at about 20-30% less than the same quality phone available in the market

Jio new feature phone

Mumbai: The Reliance Jio has announced to launch a new internet enabled 4G feature phone at ₹999. The JioBharat 4G V2 phone, as it is known, is priced at about 20-30% less than the same quality phone available in the market.

Many telecom expert believe that the new offering from the Reliance Jio could upset the telecom market and the operator could gain about 100 million subscribers in month to come. It may force the other operators like Bharti Airtel and Vodafone Idea to go for tariff correction or put up incremental hike in their tariff to save their subscriber’s base.

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The JioBharat phone will be available for sale from 7 July. The device that will work only on Jio’s network and comes with entertainment apps from the Jio stable such as Jio Cinema and Jio Saavn pre-installed.

Jio has also come out with new tariffs for this device at Rs 123 for 28 days and ₹1,234 annually. These plans will offer unlimited voice and 0.5GB data per day, which is also 31% cheaper and offers higher data usage versus Bharti’s 2GB 28 days.

“JioBharat is better placed to disrupt the market versus the original JioPhone in 2018, as it is a more-focused product, has simpler value proposition and has better distribution and production planning. We believe JioBharat can again transition over 100 million subscribers if there are no supply chain or product-performance hiccups,” say analysts in a note.

Also Read: Reliance Jio launches advanced 5G in Bengaluru, Hyderabad

Currently, Jio is aiming to target the 250 million feature phone users in India that will eventually upgrade to smartphones. Moving to smartphones means better revenues for telcos, which is why Bharti Airtel and Vodafone Idea have also been vying for these customers, however high prices of smartphones and rural consumers not being keen on switching have thwarted the conversion of 2G customers to 4G.

An expert at JP Morgan said, “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.”

India’s active 2G subscriber base has declined by nearly 70% to 249 million driven by a rise in smartphone penetration since its launch in 2016. However, JioPhone’s launch in 2017 helped over 100 million 2G featurephone subscribers to migrate to 4G. With Bharti and Vodafone Idea raising voice tariffs by nearly 80%, Jio’s new offering is likely to boost its market share among feature phone users, sector watchers added. To be sure, last year about 5 million feature phones were shipped every month.

Also Read: BSNL to launch 4G service in Bihar & Jharkhand by 2023-end

Citi Research analysts also pointed out that given the extremely price-sensitive nature of this segment, telcos’ revenues were not immediately at risk as subscribers were unlikely to be willing to spend an additional ₹1,000 upfront to purchase the phone right away. “It may initially appeal only to those looking to buy a new feature phone and may not immediately disrupt Bharti and Voda Idea’s 2G base,” analysts at the firm said.

“Jio’s increased focus on grabbing new subscribers could also be perceived as further reducing the likelihood of any near-term tariff hike,” Citi Research said in the note. Emkay analysts pointed to the step by Jio being a potent risk to the current 2G base of Airtel, Vi and BSNL, which could accelerate 2G to 4G transition and help incumbents take the hard call of shutting down 2G networks sooner.

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