Reliance Jio Infocomm’s promotional offers around the LYF smartphones are going to benefit the 4G operator, said CLSA.
The Mukesh Ambani promoted 4G operator has already said it has around 5 lakh users on trial basis on the 4G network. Today, a smartphone market report by CMR indicated that Reliance has 8 percent share in the Indian smartphone market in Q1 2016. The size of the smartphone market is 23.6 million.
Reliance Industries (RIL), the parent company of Reliance Jio Infocomm, which is pumping $20 billion investment in its 4G project, doesn’t intend to offer doles on its 4G handsets under the LYF brand.
“While Reliance has said categorically it is not looking to give handset subsidies, we expect it to come up with some bundled promotional offerings. In a prepaid market like India, any bundled offering may be very different from the handset-subsidy model popular in several other markets,” said CLSA.
Around 95 percent of India’s 900 million plus mobile user base in India is on pre-paid market. A recent report said there will be 300 million high ARPU customers with an ARPU of Rs 300 by 2018 thanks to 3G and 4G networks.
“Unlike the bundling of the phone with the service, we expect Reliance to bundle the service with phones. Reliance Jio may offer a phone for around Rs 3,400 and free services in the first 3-months, which can cover a part of the handset price and reduce the cost of ownership,” CLSA said.
In the recently launched invite-based scheme, Reliance Jio is offering unlimited 4G data, 1,500 voice minutes and 9,000 SMS free for three months on purchase of a LYF smartphone.
India already had 30 million 4G smartphones as of December 2015, and this is likely to have risen to 47 million by March 2016. Pertinently, the share of 4G smartphones in mobilephone shipments has risen sharply to 54 percent in Q3 of 2015-16.
The report said 4G smartphones will average 63-75 percent of the total smartphone shipments in India in 2016-17 and the year after, taking the total 4G penetration in the country to 212 million, or 18 percent, by March 2018 — and further to 500 million by the 5th year.
“Reliance’s own LYF brand of 4G phones and bundled offerings could enable a stronger push. In any case, this forecast clearly highlights that the size of India’s 4G smartphone market is not likely to be a limiting factor for Reliance’s ambitions,” it said.
After the launch of China Mobile’s 4G services, 4G smartphones have made up almost 90 percent of total mobile phone shipments to China in 2015. “This was due to big push made by China Mobile for 4G phones to subscribers, which included handset subsidies,” said CLSA.
Higher penetration of 4G devices will be a basic requirement for the success of Reliance Jio. The report also sought to allay concerns over how Reliance Industries will be able to face the biggest challenge of persuading consumers to buy new 4G devices to experience Jio’s services. IANS