JioPhone, a cost effective smartphone with VoLTE for a refundable price of Rs 1,500 — announced by RIL Chairman Mukesh Ambani has the potential to disrupt Bharti Airtel, Idea Cellular, Vodafone India and BSNL.
India has nearly 500 million feature phones. If Jio could attract majority of the existing feature phone users with the cheap JioPhone, it will negatively impact the rural customer base of top telecoms in India. India’s majority pre-paid users are in rural locations. A slowdown in cash flow will affect the overall telecom business of top operators.
Cash flow was affected during the currency issue last year. Currency issue and free calls from Jio were the two factors that affected revenue of top mobile operators last year. Till now, Jio’s offers could not make any difference in rural masses.
Mukesh Ambani and team is confident that a high quality VoLTE service on a free phone will dent the business of top telecoms.
Pricing strategy
Currently, the 50 crore feature phone users are charged Re 1.2 to Rs 1.5 per minute for basic voice calling. Rural masses spend their entire month’s telecom budget of Rs 150 – Rs 200 only to get 150 minutes of basic voice.
To challenge big telecom operators, Jio offers free voice calls.
Jio will provide data for Rs 153 per month. Jio is also introducing two sachets – a weekly plan for Rs 53 and a 2-day plan for Rs 23.
Highlights of Jio announcement
# Jio has over 125 million customers including 100 million paid users
# Jio users make more than 250 crore minutes of voice and video calls every day
# Data consumption in India went from 20 crore GB to 120 crore GB per month in 6 months of Jio’s launch
# Jio customers alone use over 125 crore GB of data every month, including 165 crore hours of video
# Before Jio’s launch, India was 155th in the world in mobile broadband penetration
# India has 78 crore mobile phones in the country including 50 crore feature phone
# India’s 4G coverage will be more than its 2G coverage in 12 months
# Jio will have over 10,000 Jio offices
The telecom company will be offering JioPhone for beta testing from August 15, India’s Independence Day. “JioPhone will be available to all Indians for an effective price of Rs zero,” Mukesh Ambani told the company’s 40th annual general meeting in Mumbai.
Mukesh Ambani’s son Akash Ambani and daughter and Isha Ambani introduced the Indian-made to users in India, which has more than 1 billion phone customers. The phone will support 22 languages and comes with several advanced features.
Customers have to pay a refundable security deposit of Rs 1,500 for purchasing the JioPhone. Jio will begin the pre-booking for the phone from August 24. The budget 4G phone will be available from September.
JioPhone, which is targeted at the 50 crore feature phone users in the country, will offer free voice calls and SMS to customers. Customers need to pay Rs 153 per month for accessing unlimited 4G data.
JioPhone can be connected to any TV, not just internet TV, to watch videos. The phone is pre-loaded with applications like Jio Cinema, Jio Music and others.
Jio 4G network in next 12 months will cover 99 percent of the country’s population. Jio has only 125 million customers across the country now. Out of this, nearly 100 million is paid subscribers on the 4G network.
Meanwhile, stocks of telecom operators Bharti Airtel and Idea Cellular tumbled after Mukesh Ambani-led Reliance Industries (RIL) announced the launch of the JioPhone.
Around 1.15 p.m., the scrip of Bharti Airtel fell 3.22 percent to Rs 406.25 on the BSE. Shares of Idea Cellular dipped 6.69 percent to Rs 88.50. Meanwhile, RIL stocks rose 2.70 percent to Rs 1,570.
Baburajan K
