JioPhone: Reliance Jio's 4G handset is likely to quickly replace 2G handsets in rural areas

According to the new report by Fitch Ratings, Reliance Jio's 4G handset is likely to quickly replace 2G handsets in rural areas, where smartphones had previously been out of reach for many potential customers.

The cheap handset would add 3 percent-4 percent (or around $950 million) to annual industry revenue if adopted by at least 100 million subscribers, which appears likely.

The phone will accelerate internet adoption in India and should help reverse the recent decline in telecoms industry revenue, says Fitch Ratings and Jio,
is likely to gain revenue market share as the new handset allows it to attract first-time 4G users.

Fitch said JioPhone will attract first-time 4G users and help Reliance Jio gain revenue market share. Reliance Jio handset is likely to quickly replace 2G handsets in rural areas, where smartphones had previously been out of reach for many potential customers, it said, adding the country's Internet adoption rate is among lowest in Asia-Pacific on high prices and a lack of fixed-broadband networks in rural areas.

However, the higher monthly tariffs that Jio is charging on this handset are likely to limit the impact on the revenue market share of incumbents such as Bharti Airtel.

Incumbents might also see some benefits to the extent that Jio's strategy increases adoption of 4G and helps develop India's smartphone culture - raising data usage and average spending across the market.

"Jio is likely to roll out other offers to increase its subscriber base over the next two years, and incumbents are likely to continue to respond with price cuts, discounts, and promotions of their own," the report said, adding that Reliance Jio's revenue market share is lower on aggressive pricing.