How Can RIL Attract 75 Million Feature Phone Users To JioPhone Next?

To attract buyers to the newly launched JioPhone Next, Reliance Industries is expected to subsidize consumers. The company is likely to come up with a new strategy in the next two to three years to get 75 million customers to the affordable smartphone.

This calculation is estimated per unit of the JioPhone Next, in case its price is Rs. 4,000. Notably, the most affordable 4G smartphone in the country is priced at Rs. 3,800, whereas Chinese smartphone handsets are above Rs. 6,000.

Additionally, market analysts believe that attracting 300 million users to JioPhone Next is not easy as feature phone buyers looked for ruggedness, long-lasting battery, and easy interface.

Analysts Views On JioPhone Next

"Industry sources suggest Jio is targeting an Rs. 4k price-point for Jio Phone Next, but higher shipping costs from China and rising component prices, as in microprocessor/display (rates), could make this challenging and potentially raise the subsidy element," IIFL Securities said.

"The overall subsidy could be Rs. 15,000 crore, assuming 75 million such smartphones are sold over the next 2-3 years at Rs. 2k subsidy a piece," IIFL Securities added.

On the other hand, brokerage firm UBS added that if the smartphone comes with a lighter OS, then cost reduction is possible. The firm said if Jio could bear subsidy up to $2-4 billion, then subscriber base and market share might cover all the cost.

Meanwhile, Goldman Sachs expected that Jio might add to 75 million users during FY21 and FY25 if JioPhone Next is launched with a price of 2G feature phones and that's only possible if a telecom operator offers a subsidy.

Furthermore, Jefferies said JioPhone Next is likely to attract JioPhone users whose contact is over. This is expected to boost Jio's ARPU in the coming days as in the Q4 of the last financial year was Rs. 138.2, which is less than India's second-largest telecom operator Airtel.

It is worth noting that the JioPhone Next will be available after September 10th, 2021. So, then only it will give us a clear picture of how customers are responding to the smartphone. But, surely it will attract 2G users to Jio services as the company claims the smartphone will be the most affordable 4G smartphone.