Today’s Reliance Jio tariffs could be just the beginning – analyst


Reliance Jio unveiled tariffs today that seem targeted one key aim — disrupt the businesses of its rivals.

To this end, the company has made voice calling — the bread and butter of its rivals — totally free to anyone who buys a data pack of at least 300 MB per month (Rs 149).

Not surprisingly, this has set the cat among the pigeons of Indian telecom and is likely to keep rivals busy.

However, in all this, Jio seems to have forgotten the ‘heavy data user’, as we have detailed in this article.

Now, a telecom analyst has said that he would not be surprised if the Mukesh Ambani firm unveils new rates closer to Dec 31 when its ‘free for all’ offer ends.

Under the welcome offer — also announced today — Jio said all its subscribers, irrespective of which plan they sign up for, will get unlimited voice calls, 4G data and SMS till the end of this year.

It is only from Jan 1 2017 that billing will start.

According to industry inputs, Jio was more or less forced to reveal its tariff card today by rival operators who put pressure on the regulator and the government saying the firm was misusing legal loopholes.

They accused Jio of doing a massive launch operation in the guise of testing to escape revealing its tariff plans. Under India’s telecom rules, all commercial operators must first file their tariff plans and get them approved by the telecom regulator.

However, said the rivals, Jio was delaying the filing of tariffs so that the rivals will not be able to prepare themselves for the eventual onslaught of cheap plans when Jio launched commercially.

According to analyst Sunil Tirumalai of Credit Suisse, Jio may yet have an ace or two up its sleeve and may not have revealed all its cards yet.

“Our initial impression is that this may not be the final tariff offers (i.e. company has not revealed all their cards yet),” Tirumalai and his colleague Viral Shah said in a note.

“As mentioned, these plans are applicable only from 1-Jan-2017, by when the incumbents will have ample time to match (with meaningful pain ofcourse). We suspect a new set of tariffs could be announced closer to Jan.”

Tirumalai and Shah have been among the most cautious, even pessimistic analysts covering the Indian telecom sector.

He, along with his colleagues at Credit Suisse have warned that Jio’s entry would cause major disruption in the telecom market and upset the businesses of rivals.

“While most of the monthly plans are targeted at the higher end users (Rs500+ ARPU vs current Bharti ARPU of Rs196), the Rs149 plan is right in the mass market segment,” the analysts said.

They noted that the average Bharti customer today spends Rs196 per months, consumes 414 mins of voice (incoming + outgoing) and ~200MB of data.

“Under Jio’s Rs149 plan, this average customer can unlimited voice, 50% more data for 25% lower monthly spend. The only constraint.. is that the customer needs to have a 4G phone,” noted.