After racking up 100 million users for its 4G-enabled feature phones (JioPhone), Reliance Jio in partnership with Google is eyeing the entry-level smartphone segment. Jio is planning to win over 350 million 2G feature phone users by launching a smartphone ‘at a fraction of the current cost’.
Experts believe that Jio, which dominates the mobile broadband space (4G) with 58 per cent market share, could capture the incumbents’ market share in the feature phone segment with its new offering.
While Bharti Airtel has 135 million 2G users, 47 per cent of its total subscriber base of 283 million, Vodafone Idea has 174 million 2G users, about 60 per cent of its total subscriber base of 291 million at the end of the March quarter.
Mayuresh Joshi, head of equity research at William O’Neil India, says: “Vodafone Idea has the highest 2G subscriber base among the top three operators. This coupled with a weak financial situation and inability to commit large capex investment will make it the most susceptible to subscriber loss. The ongoing churn for Vodafone could accelerate if Jio is able to launch a smartphone at a substantially lower cost in partnership with Google.”
The company’s payouts going ahead include adjusted gross revenue (AGR) dues as well as deferred spectrum payments. Even with a deferred AGR payment, Motilal Oswal Financial Services estimates that the company would require an operating profit of Rs 30,000 crore in financial year 2021-22 to meet its capex, interest costs, deferred spectrum liability and part payment of AGR dues.
ALSO READ: M&A up 14.55 % in H120 led; Jio Platforms investments up deal value
This will require the company to raise its average revenue per user (ARPU) by 53 per cent to Rs 190 from Rs 121 at present. Given the higher share of entry-level and rural base, Vodafone has the lowest ARPU in the sector.
Angel Broking believes that increased subscriber churn without fixation of floor tariffs and no major relief from the Supreme Court on the AGR matter will make it difficult for Vodafone Idea to survive in the industry.
The stock of Vodafone Idea has slipped 16 per cent over the last two trading sessions.
To read the full story, Subscribe Now at just Rs 249 a month
Already a subscriber? Log in
Subscribe To BS Premium
₹249
Renews automatically
₹1699₹1999
Opt for auto renewal and save Rs. 300 Renews automatically
₹1999
What you get on BS Premium?
-
Unlock 30+ premium stories daily hand-picked by our editors, across devices on browser and app.
-
Pick your 5 favourite companies, get a daily email with all news updates on them.
Full access to our intuitive epaper - clip, save, share articles from any device; newspaper archives from 2006.
Preferential invites to Business Standard events.
Curated newsletters on markets, personal finance, policy & politics, start-ups, technology, and more.
Need More Information - write to us at assist@bsmail.in