Reliance Industries Chairman Mukesh Ambani has today revealed details of Reliance Jio’s launch on the occasion of the company’s 42nd AGM. Reliance is planning a very aggressive launch of the Jio by resorting to heavy price cutting. The company has already incurred a relatively high sum of 1,34,000cr towards capex for the venture and the spending is expected to increase further. Such capex spending is huge compared to what has been incurred by other telecom operators such as Bharti Airtel and Idea Cellular. Reliance’s strategy is to grab significant market share from competition, which should resultantly lead to other telecom operators getting compelled to lower prices to defend their customer base and overall market share.
Further our preliminary analysis suggests that subscribing to Reliance Jio’s plans would result in 2x-4x savings for consumers. If the aggressively priced offerings of Reliance Jio find favour among customers then the company would be able to notch up significant market share from competitors. To add to the goodies, the company is offering unlimited voice calling and data download to customers free of cost from 5th September 2016 to 31 December 2016. In our view, this is an attractive offering and might entice customers of competing telecom players to switch to Reliance Jio. The competition is likely to face intense pressure on their bottom-lines in the quarters to come, given the value proposition in the offerings of Reliance Jio.
During 1QFY2017, telecom companies were able to deliver double digit top-line growth although their performance faltered on the bottom-line front. Gauging increased competition with Reliance Jio’s advent, we prefer to be cautious on the sector.
Key takeaways from AGM:
- Reliance Jio price points starting from 19 for the occasional data user to a monthly 149 plan for the light data user (0.3GB 4G data) and all the way up to a monthly `4,999 plan for the heaviest data user (75GB 4G data).
- No charges for voice calling (local and roaming).
- Reliance Jio would provide data packs at 5x-10x lower price points than other operators.
- Jio’s 4G network will cover 18,000 cities and towns and over 2 lakh villages.
- By March 2017, the company plans to cover 90% of India’s population.
- Reliance Jio will offer true 4G LTE smart phones starting from 2,999 and Jio-Fi for 1,999 to enable all Indians to migrate to Jio’s data strong network.
- Ambani unveiled a special students discount offer, under which any student will be able to get 25% more data on Jio’s main tariffs.
- Reliance Jio’s full commercial launch would be on 31st December 2016.
- With the Jio app, the company is also offering access to more than 6,000 movies and 10mn songs at no cost.
Here is a snapshot of Reliance Jio’s Tariff: