Will JioPhone help Reliance to remove Airtel from No. 1 position?

It looks like a scripted story for Mukesh Ambani and Reliance Jio as things are working as per plan but things would not be easy moving forward. Having pocketed 125 million subscribers in a record time of which more than 100 million is paid customers through Jio Prime offer, Mukesh Ambani is now moving to the next big target and is eying the No. 1 position in the Indian telco space in 2018, courtesy JioPhone, an intelligent smartphone.

As per Q4 FY2016-17 results, Bharti Airtel was seated at No. 1 position in the Indian telco space with 274 million mobile customers and quarterly mobile revenues of Rs. 12,972 crore. Vodafone was at No. 2 position with 212 million customers and quarterly revenues Rs. 10,411 crore (Euro 1.385 million) as per Q1, FY2017-18. Idea Cellular was at No. 3 position with 190 million mobile subscribers and quarterly revenues of Rs. 8,126 crore as per Q4 FY2016-17. In case of Reliance Jio it is presently 125 million mobile subscribers but the company is looking at 400 million subscribers in 12 months time according to industry insiders who are privy to Reliance Jio mega plan.

Rank – Operator – Mobile Subscribers – Quarterly Revenue

1. Bharti Airtel – 274 mn* – Rs. 12,972 Cr*
2. Vodafone – 212 mn** – Rs. 10,411 Cr** (Euro 1,385 mn)
3. Idea Cellular – 190 mn* – Rs. 8,126 Cr*
4. Reliance Jio – 125 mn** – NA

NA stands for not Not Available

* Stands for subscribers and revenues in Q4, FY2016-17

** Stands for subscribers and revenues in Q1, FY2017-18

1 Euro is equal to Rs. 75.17

Source: DigiAnalysys

It seems JioPhone has come out with PreDiwali Dhamaka almost 90 days before Diwali (October 19, 2017) and the plan is to get maximum mindshare as well as marketshare in the days to come.

Mukesh Ambani’s first target is to surpass the magical figure of 274 million subscriber number achieved by Bharti Airtel and for this the company has come out with a new product called JioPhone, an intelligent smartphone which will be available for beta testing from August 15, 2017. Prebooking of JioPhone will begin from August 24, 2017 onwards and JioPhone would be available from September 2017 onwards.

According to industry estimates, there are 78 crore mobile phones in India of which 50 crore are feature phones and JioPhone is targeting to upgrade 50 crore 2G and 3G feature phones to 4G feature phones in days to come by providing affordable data at the rate of Rs. 10 per GB which is unheard anywhere in the world. If Reliance Jio is able to get 30 – 40 per cent market share the number comes to around 15 – 20 crore. And the cumulative figure for Reliance Jio comes around 275 – 325 million.

Speaking about the plan, Mukesh D. Ambani, Chairman and Managing Director, Reliance Industries said, “There will be fair usage policy of half a GB per day to ensure that bandwidth is fairly apportioned for every user.”

With respect to pricing, JioPhone will cost a one time security deposit of Rs. 1,500 which will be fully refunded when the customer returns the used JioPhone after 36 months. In terms of connectivity, Jio has a monthly plan of Rs. 153 per month, Rs. 54 per week and Rs. 24 for a 2 day plan. As per Rs. 153 plan, the customer will get 500 MB of data per day for 28 days along with free voice, free SMS, free Jio Apps and unlimited data.

First, the offer looks attractive on paper and it will be good to see what will be the counter strategy of Bharti Airtel, Vodafone and Idea Cellular. If they incumbent operators are able to match the offer which they have done in the past it is a definitely a win-win for the consumers but both revenues and profit will go for a toss for incumbent operators and it will definitely arrest Reliance Jio from reaching that magical number of 275 million.

Second, subscribers are not aware about the complete technical specification of JioPhone and its user experience. If Jio is able to surpass the user expectation for JioPhone in months to come then the task become all the more easy for Mukesh Ambani to capture the No. 1 slot in the Indian telco space. So, customer experience both on the device and connectivity will be the key.

The industry will definitely witness a massive churn in months to come and if incumbent operators like Bharti Airtel, Vodafone and Idea Cellular can hold their turf in terms of subscriber market share then it will be a big win for all the incumbent operators but prima facie the operators are on a losing turf.