Reliance Jio tariff plan just right to capture mass market: Analysts

Mumbai The eventual tariff for Jio 4G services announced by Reliance Industries Chairman Mukesh Ambani which has a surprise element of free domestic calls with no roaming charges is just right to capture a large share of Indias telecom and data market pie analysts maintainMukesh Ambani Chairman Reliance Industries Ltd with his son Akash Ambani at the companys annual general meeting in Mumbai on Thursday PicPTIWhile most of the monthly plans are targeted at the higher end users of an average revenue per user of over Rs 500 per month versus the current Bharti Airtel figure of Rs 196 the Rs 149 plan is right in the mass market segment said Credit Suisse in its latest analysis referring to the Jios base tariff for a regular userPutting it in a perspective the leading financial services group said the average Bharti Airtel customer today spends Rs 196 per month consumes 414 mins of voice for incoming and outgoing calls and gets 200 MB of data Under Jio this average customer gets unlimited free voice and 50 per cent more data for 25 per cent lower monthly spendThere are other incentives as well especially for higherend users and students This apart Reliance Jio is deploying wifi hotspots at key locations nationwide and Jio customers will have access to them besides free access to all of Jios content library including live and stored TV movies songs magazines and newspapers till December 31 2017The analysis comes against the backdrop of Reliance Jio announcement on Thursday that domestic phone calls from its network will be free forever with zero roaming charges along with a fourmonth introductory offer for everyone of a zerotariff voice and data services beginning on September 5 It also announced tariffs that are well below what customers are charged todayJios focus likely will be to retain majority of these subscribers over five million that Jio is currenty said to have when they commercially launch Jio offerings first as a secondary SIM and then over time by offering better networkvalue proposition as primary SIM said leading investment banking firm Bank of America Merill LynchIn our view incumbent telecom companies would not aggressively match Jios offering but try to be at a mild premium to Jio thereby providing some space for Jio to gain market share Else it would lead to Jio getting more aggressive to gain traction but at the cost of impacting industry profitabilityreturnsAnother global investment research firm Bernstein said Jios Rs 499 plan is slightly above the average revenue per user base in IndiaThis is the right initial market for Jio to target and the promise of unlimited voice and text plus content apps and other addons will make the Jio offer quite attractive versus what they have today it saidThe research firm also said the entire base of those who pay Rs 493 per month revenue is only 51 million and that the competitive responses taken by Bharti Airtel Vodafone and Idea Cellular the three top incumbent players will ensure they dont collectively lose this entire segmentOur own analysis based on current 4G spectrum holdings suggests Jio could capture up to 44 per cent allowing them the existing players to win 22 million users from this cohort Bernstein also said average data users in India currently consume around 800 MB per month so the 300 MB Jio offer at the base would be a step backward for most of themOur expectation is that the data explosion is just beginning and 300 MB will be far too low for any real 4G usersLooking ahead the research firm said other players are doomed For the others this is the beginning of the end game India will rapidly switch to 4G and any operator incapable of competing in this segment is doomed to eventual failure it saidWe remain doubtful that Tata Telenor and the other marginal players stay in the game much longer Their best hope is to seek a partner who might be willing to consolidate their base for a small equity share