Reliance eyes 2G users from rivals with Rs 699 JioPhone in festival season

Ahead of the festive season, Reliance Jio has slashed prices of its feature phone on Tuesday as it hopes to onboard 2G subscribers from rival operators.  During Dussehra and Diwali, Jio is making the JioPhone available for Rs 699 against the current price of Rs 1,500. 

The company said the offer is targeted at over 350 million 2G users currently paying extremely high data rates for poor quality 2G data.  “By offering the ‘JioPhone Diwali Gift’, we are making an investment of Rs 1,500 towards bringing every new person from the bottom of the economic pyramid into the Internet economy. This also shows our commitment to the success of our Prime Minister Narendra Modi’s visionary Digital India mission,” said Mukesh Ambani, Chairman & Managing Director, Reliance Industries (RIL). 
 

For JioPhone customers who join through the offer, Jio will offer data benefits valued at Rs  700. For first seven recharges that the customer does, Jio will additionally add Rs 99 worth of data. 

Incumbent telcos Vodafone Idea and Bharti Airtel have already announced plans to shut down or upgrade 3G/2G subscriber base to 4G and have been rolling out infrastructure accordingly. However, as Jio does not have any 2G or 3G base, it has allowed the telco to forge ahead in terms of 4G market share. According to a recent Motilal Oswal report, Airtel’s management has said the impact from downtrading plans and the minimum recharge plans is now largely behind. 

Airtel has set a target to capture 35-40 per cent of the incremental mobile broadband subscriber share. It also aims to pick a similar share from Vodafone Idea’s subscriber churn. Meanwhile, it is benefiting from a healthy upgrade in voice average revenue per user (ARPU) from Rs 60 to Rs 120. 

“Notably, even after roll out of the minimum recharge programme, the company has retained 50-60 million of the total 100-120 million low-ARPU (i.e. Rs 10-15) subscribers, which has driven a 3-4 times rise in ARPUs. Apart from this, tariff upgrades (some minor tweaks in price plans/validity) and Airtel Thanks are contributing to the incremental ARPUs,” wrote Aliasgar Shakir, research analyst, Motilal Oswal.