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Reliance JioPhone: Ratings agencies divided on impact of this 4G feature phone

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Mumbai: Flagging concerns on the success of proposed cheap phone from Reliance Jio, rating agency ICRA said it’s positive from an ARPU perspective, while rival CRISIL estimated a massive slowdown in data usage growth to four times in the next five years from the present 24 times. “JioPhone is likely to keep the competitive intensity of the industry high with RJio targeting strong addition of lower-ARPU (average revenue per user) subscribers and/or rural subscribers,” ICRA said in a note.

The report said in the long-term, Jio can help push up the overall ARPU levels of the industry with the product aimed at low ARPU users. The agency, however, flagged a slew of concerns for the success of the offering, including this being a bundled phone, which has not succeeded in the domestic market so far many times, the “tricky issue” of bundling of apps and creating a ‘walled garden’, and if it can let a customer use other apps.

“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,” it said, adding the effectively free phone can also increase funding requirements for the company.

Meanwhile, another agency CRISIL said it expects data usage growth to slowdown to four times in the next five fiscal years, as against the 24 times in the previous five. The number of data subscribers are estimated to double to 900 million and the penetration will also double to 80 per cent in the period, it said.

CRISIL said the faster penetration would be supported by a continued drop in tariffs given the intense fight for market leadership and telcos will have to “increasingly sweat per-subscriber usage to bolster incremental revenues.”

Mobile data usage per subscriber nearly doubled to around 1.3 GB per month between fiscal 2013 and 2017 on faster adoption of 3G and 4G services, CRISIL said, adding Jio’s free data and a sharp 40 per cent fall in tariffs in fiscal 2017 were the growth propellants.

Over the next five years, a larger number of new users will be from rural areas and their relatively lower data usage would impact the industry’s average data usage adversely. CRISIL said a similar trend was observed in China as well and added the faster and cheaper WiFi will play an important role from here on.

“The cost of offering services on WiFi is just a fifth of mobile, and speeds are significantly faster, too. We expect a sharp increase in WiFi hotspots over the next three to five years, which can be a drag on mobile data growth once penetration growth plateaus,” the agency said.

Despite the drop in tariffs, mobile will be 80 per cent costlier than WiFi, it said, adding the country has only around 35,000 hotspots compared with 58 lakh and 6.5 lakh in China and South Korea, respectively.

Reliance JioPhone: Ratings agencies divided on impact of this 4G feature phone Reviewed by on . Mumbai: Flagging concerns on the success of proposed cheap phone from Reliance Jio, rating agency ICRA said it’s positive from an ARPU perspective, while rival Mumbai: Flagging concerns on the success of proposed cheap phone from Reliance Jio, rating agency ICRA said it’s positive from an ARPU perspective, while rival Rating: 0
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