Data war: Reliance Jio might slash rates further; consumers to benefit more

Zee Media Bureau

New Delhi: Are you already thrilled with Reliance Jio data rates? Well, you might be in for some more joy. As per a news paper report, Reliance might further cut rates of  Jio 4G services.

A report in the Economic Times said that Jio, which has a safe cushioning from strong balance-sheet of Reliance Industries, might offer further slashing of rates.

Quoting Experts, ET said that Jio may extend its free offer on data after January 1, 2017 so as to boost customer volumes.

Storming his way into telecom sector, Mukesh Ambani had recently announced the launch of much-talked about Jio 4G service, offering free voice calls and national roaming along with what he touted as the world's lowest data tariff.

Targeting 100 million customers in the shortest span of time, he said that Jio will offer data for Rs 50 per GB and monthly plan for as low as Rs 149.

Voice calling will be free on Jio phones for life and post December 31, 10 data plans will be offered starting at Rs 19 a day for occasional users, Rs 149 a month for low data users and Rs 4,999 a month for heavy data users.

Ambani, 59, who had more than a decade back left the telecom business to younger brother Anil when the Reliance empire their father had created was split, outlined his re-entry plans through a slew of "affordable" offerings and plans that promise to shake up the country's telecom industry.

"We Indians have come to appreciate and applaud Gandhi-giri, now we can all do 'data-giri', which is an opportunity to do unlimited good things with unlimited data," Ambani said at the AGM.

In 2003, the undivided Reliance had created a storm of kind by announcing monsoon hungama, offering wireless connectivity for an unheard price of Rs 501.

Devoting two-third of his 90-minute speech to make a slew of announcements on Jio, he took competition head-on by announcing free services on Jio for four months beginning September 5.

In the speech that found mention of his children, Isha and Akash, who are both the directors on Jio as also his wife, Nita, Ambani did not forget to make a mention of government's ambitious programmes Digital India, Make in India and Prime Minister Narendra Modi.

"Jio will fulfill Digital India dream of Prime Minister Narendra Modi," he said, calling Jio a "revolutionary" step to realise India's digital ambitions.

Reliance Jio Infocomm is offering unlimited data and premium access to all the Jio apps till the end of the year for all the consumers.

Ambani mentioned that it will have digital e-KYC activation so the SIM card can be activated instantly.

Reliance Jio claims to be the cheapest LTE provider in the world. "I believe that these are the absolute lowest data rates anywhere in the world. Jio makes India the highest quality, most affordable data market in the world," he said.

He also announced Jio's entrepreneurship fund that aims to provide venture capital to encourage young entrepreneurs to build digital businesses.

Archrival and the largest mobile operator in the country Bharti Airtel welcomed Reliance Jio's "entry to the digital world" and said as a responsible operator it will fulfil all regulatory obligations as always.

Vodafone Spokesperson said: "We have always offered great value to our customers, backed by excellent customer service, a nationwide presence, and Vodafone SuperNetTM our best network ever. We will continue to do so for our hundreds of million customers across the country."

Existing operators under the aegis of Cellular Operators Association of India have been locked in a battle with Reliance Jio over providing points of interconnect.

Telecom analysts said Reliance Jio has delivered a knockout punch on pricing of voice and data tariffs.

"No doubt tariff plans for voice and data is going to be game changer for telecom industry... Though, topline from telecom business will start trickling in; however big concern arises on timelines of achieving operating break-even point in context of tariff policy deployed," said Dharmesh Kant, Head Retail Research, Motilal Oswal Securities.

In what could further escalate the ongoing tariff war between several telecom companies –Airtel, Vodafone, Idea and BSNL, customer are surely going to be winner. For, these telecom companies have said that they too will look into the tariff plans and might come up with lucrative offers for the users.

Expert Views

Consumers could see their monthly mobile bills coming down significantly as Reliance Jio's (RJio) disruptive entry into the Indian telecom market with rock-bottom prices is expected to unleash a new round of price war in the industry, analysts said.

Tanu Sharma, Associate Director Large Corporates, India Ratings & Research said that data tariffs are bound to see a "major correction" due to RJio's launch while the benefits from higher data volumes and user growth will be back-ended.`

Sharma said that RJio's free voice calling and SMS services and data bundle offer, could hurt the voice tariffs of existing operators, who would need to respond with similar offers in a bid to protect their turf.

The debt profile of operators will deteriorate in 2016-17 as they may incur high capex on network expansion and acquisition of additional spectrum to compete with RJio, Sharma added.

Stating that the telecom sector is currently reeling under financial stress, high debt burden and slowdown in revenue growth, Prashant Singhal, Global Telecommunication Leader, EY noted that, "Further decline in data tariffs may impact operators' profitability and sustainability".

Motilal Oswal Securities' Head (Retail Research) Dharmesh Kant termed RJio's tariff as a "knockout punch" but said the big concern arises on timelines of achieving operating break-even point.

Industry will wait-and-watch for few quarters on how RJio's operations develop, and operator manages network and operations for better customer experience, Gartner Research Director Amresh Nandan added.