JioPhone is likely to keep the competitive intensity of the industry: ICRA

Bundling of apps with the phone remains a tricky issue because of concerns of a ‘walled garden’. It remains to be seen whether the device offers the flexibility to use other apps.

By Priyanka
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According to the new study by ICRA, JioPhone is likely to keep the competitive intensity of the industry high with RJio targeting strong addition of lower- Average revenue per user (ARPU) subscribers and/or rural subscribers.

 
JioPhone is likely to keep the competitive intensity of the industry

Speaking on the launch of Jio phone, Harsh Jagnani, Sector Head and Vice President, Corporate Ratings, ICRA Limited said: "As per our initial impression, JioPhone is likely to keep the competitive intensity of the industry high with RJio targeting strong addition of lower-ARPU subscribers and/or rural subscribers. While the pricing is high in comparison to the ARPU levels prevailing at this band of subscribers, the proposition of unlimited content is attractive, and that too with a device which is priced marginally.

 

He said, "If this proposition sees wide acceptance, it will pose serious competition to the other players, although smaller players will be more threatened. At the same time, in the longer term, JioPhone can push up the overall ARPU levels of the industry".

The firm said that, a tariff of Rs. 153 per month translates into ARPU of Rs. 130 for RJio. In contrast, for Q4FY2017, the ARPU of Bharti Airtel stood at Rs. 158, while that of Idea Cellular stood at Rs. 142 which reflects the blend of both urban and rural subscribers. RJio offering base ARPU of Rs. 130 heralds uplift in the ARPU of the industry. But this gain will fructify over the longer period till the rural subscribers get captivated to higher data usage, albeit at a higher monthly cost.

However, clarity is required on many uncertainties before one can make a certain call on the future potential of JioPhone. JioPhone is a bundled phone meaning that the subscriber is tied to a specific service provider i.e. RJio while using this phone. Traditionally bundled phones have not done well in India, leaving apart the minor success CDMA enjoyed in its initial days.

Also, bundling of apps with the phone remains a tricky issue because of concerns of a 'walled garden'. It remains to be seen whether the device offers the flexibility to use other apps, primarily those based on an android platform without which it offers very restricted use.

Further, marketability and acceptability of JioPhone would hinge on the kind of data experience it offers to the users without the port to connect to the TV, which comes at a higher monthly charge.

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