Competitor accuses Reliance Jio of possibly raising the telecom major's market share at the lower end of the market. Read below to know details.
The new low-cost 'Jio Bharat' smartphones that are soon to be launched by Reliance Jio are likely to raise the telecom major's market share at the lower end of the market, said JP Morgan. JP Morgan in a report called 'India Telecom' said, 'Jio Bharat' can possibly disrupt the bottom of the pyramid. Reliance Jio launched the 4G- enabled phone at Rs 999 per unit, the lowest entry price for an internet-enabled mobile phone. q
Users will get unlimited voice calls and 14 GB data at a recharge of Rs 123 per month compared to other operators' Rs 179 plan for voice calls and only 2 GB data. According to JIO, 250 million mobile users still use the 2G with feature phones.
Feature phones do not provide internet access hence tampering with one's livelihood and economic growth. The motto behind the launch of Jio Bharat is to empower every Indian with the power of digital services, specially for those who can not afford a smartphone, said Jio in a release. The beta trial for these low-cost smartphones will begin on July 7. The phones will come with inbuilt apps such as JioSaavn and Jio Cinema. It also offers UPI through Jio Pay.
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"This disruptive step can halt incremental tariff increases for 2G and help JIO gain share in that segment. Jio already had become aggressive at the premium end in Mar'23 through aggressive postpaid plans in addition to fibre pricing. We think this is negative for both UW-rated Bharti and IDEA gave returning disruption and tariff aggression at the bottom of the pyramid and signals lack of support for 4G tariff actions," JP Morgan said in the report.
"We believe with this phone Jio can take market share at the lower end of the market. This also puts Bharti at risk as it can see increased churn from its recent 2G price action of increasing the Rs99 plan to Rs155 plan," said the JP Morgan report.
Morgan's report also said that Jio has already become aggressive at the premium end of subscribers in March 2023 via aggressive postpaid plan launch and now the phone launch event showcases its aggressiveness towards the lower end of the spectrum as well.
As per JP Morgan, the new announcement will be negative for both competitors Bharti Airtel and Vodafone Idea. "We think this is negative for both UW-rated Bharti and Idea gave returning disruption and tariff aggression at the bottom of the pyramid and signals lack of support for 4G tariff actions," the report added.
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