Reliance Jio decides to stop free services after TRAI order

jio-networkTelecom Regulatory Authority of India (TRAI) has asked Reliance Jio to withdraw three months free benefits of JIO SUMMER SURPRISE.

The decision to stop free services will be a big relief for rival telecom operators such as Bharti Airtel, Idea Cellular, Vodafone, BSNL, etc.

Jio announced its JIO SUMMER SURPRISE offer on 31 March. Under the JIO SUMMER SURPRISE, all JIO PRIME members making their first recharge payment of Rs 303 (or higher) plans received three months complimentary services in addition to the benefits of their purchased plan. For this, users need to spend Rs 99 towards Prime membership and Rs 303 or higher towards the first recharge.

Earlier, TRAI did not stop Reliance Jio, an all India 4G operator, when it introduced free voice and data services from September 2016 to March 2017.

Jio said it is in the process of fully complying with the regulator’s advice, and will be withdrawing the 3 months complimentary benefits of JIO SUMMER SURPRISE as soon as operationally feasible, over the next few days.

Jio said customers who have subscribed to JIO SUMMER SURPRISE offer prior to its discontinuation will remain eligible for the offer.

Reliance Jio, the Mukesh Ambani promoted telecom venture of Reliance Industries (RIL), has already received over 100 million customers during the promotion phase. The telecom company last month said over 72 million of its customers have signed up for Jio Prime membership.

Jio has also extended the Prime membership drive to April 15 from the earlier March 31. There will be no change in the extension date. By paying a life time fee of Rs 99 for the Jio Prime membership, Jio subscribers can get unlimited data for a monthly fee of Rs 303.

“This mobile subscriber retention is well above the recent expectations of 50 million that were being built in. This will lend confidence in the ability of Reliance Jio to monetize services and challenge incumbents,” said investment firm Jefferies recently.

Jefferies said the potential for Reliance Jio to disrupt can be gauged from its aspiration to reach a 50 percent market share in India.

Currently, Bharti Airtel is the largest telecom operator with a share of more than 23 percent. Jio has 6 percent share.

Reliance Jio creating a 5x data capacity and a head start of 3-4 years vs competition should hold it in good stead and allow it flexibility to offer more for less price if needed to capture market share. Jio is adding another 100,000 telecom sites in addition to the existing 100,000.

Today, Bharti Airtel said it doubled the number of cell sites to 180,000 in two years to manage the demand for mobile data from Indian smartphone users.

IIFL said it expects Jio to enhance market share to 22 percent and revenues to Rs 60,000 crore and report PBT breakeven earliest by 2021-22. Jio will register a loss of Rs 19,600 crore in 2017-18 and Rs 11,500 crore in 2018-19.

Baburajan K