With Freebies Gone, How Reliance Jio Stacks Up Now?

Reliance Jio’s six-month long free 4G service to gain foothold in the market weaned away 100 million users to Jio Network and had virtually disrupted the telecom and broadband market in India sending its rivals scurry for cover.

Now that Reliance Jio chairman Mukesh Ambani has announced the end to freebies from April 1, 2017, the industry rivals, especially Aircel and Vodafone are relieved to take a relook at their business strategy. But the fight ahead is tough not only for the major player Airtel but also for all others.

Analysts said the transition of Jio from free to paid service will bring down its user base for whom it was a second service provider and not primary. This will ease the pressure on Jio peers now, they assured their clients.

Reliance Jio ofered to continue its offer of 1 GB per day and free calls including free roaming calls to its users from April 1 for Rs.303 and a one-time payment of another Rs.99 as Prime Membership fee. It offered substantive reduction if its rivals bring down their rates.

Bharti Airtel as of now is offering unlimited calls and 1GB 4G data at Rs 345 for 28 days, and 30GB data for 90 days at Rs 1,495. The other major player, Vodafone is offering unlimited calls and 50 MB 3G or 1GB 4G data for 28 days for Rs.349. Neither could offer what Jio has brought on the platter. So, what Jio offers for one month is being offered by Airtel in 90 days and at three times the price.

No wonder, Credit Suisse brokerage analyst in his note said: “The next 30 days would probably be used to gauge the shift to these new price points and to these to existing subscribers."

Goldman Sachs analysts said the end of freebies will return major telecom players to their user base. “Jio’s pricing is attractive, but not overly disruptive. Jio offers Rs 303 for unlimited voice and data, compared with Rs 349 for unlimited voice and 1GB data offered by Vodafone. However, we note that the top 10 per cent of Indian mobile subscribers account for 40 per cent of industry revenues and will still find Jio offer attractive.”

Going by Goldman Sachs assessment, nearly 40 million subscribers of Jio will pay for the new Jio Prime Offer and stick to the new telecom player. Still, this should ease the pressure on Reliance Jio.

[ tags reliance jio vs airtel, telecom freebies, mukesh ambani, vodafone offer, airtel 4g offer, jio prime membership, comparison, future competition of telecom giants ]

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