JioPhone will gain the market share in feature phone segment: India Ratings

Reliance Jio Infocomm Limited's new monthly tariff plan exclusive for its feature phone (Jio Phone) users will fasten its subscriber base growth, especially in Tier II cities and rural areas, research firm India Ratings said.

It said that as tariff wars spread to this segment to capture a significant market share, industry ARPU recovery could become more challenging.

The firm said that Jio's new plan comes with unlimited voice calls and per day 1GB data validity of 28 days exclusively available with Jio Phone. This plan comes as a stark contrast with existing plans for incumbents who provide validity of just a day for 1GB data with zero talk time or only 300MB of data for the validity of 28 days.

Ind-Ra also believes Reliance Jio will increasingly add its subscriber share through its feature phone. However, the additions will likely be more in semi-urban and rural areas where the existing smartphone penetration level is lower along with data usage than in urban areas which are highly saturated.

Airtel Karbonn A40 first impression: A smartphone for the price of a feature phone?

The firm pointed out that, feature phones are an attractive proposition for rural users, being economical and with limited and useful features. On an average, a feature phone user is likely to spend and continue its tariff plan since it is used primarily for calling and hence the ARPU is typically higher.

Though the market share of smartphones is increasing gradually, feature phones still dominate in tier II, tier III cities and rural areas. The firm believes in low tariffs and effectively zero cost handset, Jio Phone will gain the market share in feature phone segment, especially in rural and tier-II city onward regions. Furthermore, ARPU of the incumbents shall shrink since users may migrate to the low tariff Jio Phone.