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RJio takes it to next level, a Bharat phone PDF Print E-mail
Monday, 24 July 2017 04:28
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With over 200mn users paying Rs 140pm today, RJio makes a bold pitch for them

Though the RJio impact on incumbent telcos was always going to be very big with its free voice and Dhan Dhana Dhan data packs at as low as Rs 5 per GB—at the time, existing telcos were selling data at Rs 250 per GB and were forced to slash it—it was always targeting a limited market, of people who could afford Rs 3,500+ for a smart-phone and who could shell out Rs 300+ every 28 days (even though the Dhan Dhana Dhan offer increased the pack-validity by another 28 days, the money had to be paid upfront). Just around 200 million subscribers, going by an exhaustive Kotak Institutional Equities analysis, spend over Rs 280 per month on their phone calls—we are assuming those who pay Rs 280 would upgrade to Rs 309 to avail the unlimited voice and cheap data. In a sense, then, with 100 million subscribers, RJio had more or less saturated that market.

It is this that, going by what its chairman Mukesh Ambani said at the RIL AGM on Friday, that RJio has sought to change. For one, the RJio team worked with chipset companies like Qualcomm to come up with feature phones which can offer reasonable browsing and viewing facilities, and at a low cost. When Ambani said the phone was effectively free, he wasn’t exaggerating. Under the plan, users will pay Rs 1,500 for the phone but the money is to be refunded to them once they turn in the phone after three years—effectively, then, the cost of the phone becomes the interest cost of around Rs 400 or so. If RJio ties up with banks or finance firms, as it undoubtedly will, the upfront Rs 1,500 will probably get financed with the consumer paying Rs 500 or thereabouts as interest and other charges. The free-voice pack will cost Rs 153 per month and will offer 0.5GB a day to users—in other words, if the Dhan Dhana Dhan 28-day additional facility is not available, the data will cost around Rs 10-11 per GB. With another 210 million people in the country, going by the Kotak analysis, paying Rs 140 per month for phone calls, effectively that is the new base RJio can now target. Sachet packs of Rs 24 and Rs 54 have also been provided to cater for an even lower price point.

Unlike existing telecom players who, by and large, have focused on providing a telecom service and waited for phone prices to come down, RJio has chosen to influence the handset prices directly. While the phone, for now, does not offer WhatsApp—it offers JioChat—chances are this could be available over a period of time. Certainly, those who have designed this phone for RJio will offer this in the rest of the market soon enough, but the phone is a VoLTE one and cannot be used on GSM networks. That means, a Bharti Airtel or a Vodafone or an Idea subscriber can only benefit from cheaper feature phones after these telcos’ networks are completely VoLTE. While converting to VoLTE will take time, the fact that RJio has more spectrum in the sub-1GHz band is an added advantage—RIL’s decision to invest in Balaji Telefilms will also help build up the local content library. Recouping its investments will require RJio to boost subscriber payments considerably, but Friday’s announcements have taken the battle one step more into the incumbents’ territory. With the battle on Interconnect User Charge getting even more high-pitched (goo.gl/9cJFYP), expect more of a bloodbath in the industry.

 

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