Reliance Jio’s Rs 699 phone offer may hit Airtel, Vodafone-Idea

Reliance Jio’s (RJio) move to drop entry-level phone price to Rs 699 and bundle it with data could hit incumbent operators, according to analysts.

“The offer clearly targets non-data/2G subscribers of Bharti Airtel and Vodafone Idea (VIL), which stand at 42 per cent and 52 per cent,(of their total user base) respectively. The move is negative for both Bharti and VIL, and historically VIL has been more susceptible to market share losses,” said a research report by Emkay.

RJio is now offering its entry level JioPhone at Rs 699 as against the original price of Rs 1,500 under a special offer. In addition to this, the customers will also get data benefits valued at Rs 700. Jio will add Rs 99 worth of data for the first 7 recharges by the customer.

“Any aggressive promotions by Jio can be negative for Bharti and Vodafone Idea. With this promotional offer, we believe Jio is continuing to focus on the feature phone segment to drive its growth. The recent move by Jio also reduces hopes of tariff increase in the near term with Jio still being in market share 'grab' phase,” Credit Suisse said in a research report.

RJio had cut the price of JioPhone at its last year AGM to Rs 500. However, it still entailed an upfront commitment of Rs1,095 from the customer. As part of the current promotional offer, Jio seems to have done away with the requirement of upfront recharges and the exchange of old phones effectively reducing the upfront commitment to Rs 699.

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“With the subscriber losses of Bharti and VIL after introducing the minimum recharge plans started to stabilize, JIO has launched this offer to attract the low-end non-data/2G subscribers. We do not expect any counter offer from incumbents to this JIO offer — which we have not seen in the past as well — as they have not adopted the handset subsidy model,” said Emkay Research.