 "Data tariffs are bound to see a major correction due to Jio")
Reliance Industries Chairman Mukesh Ambani officially launched the Jio 4G services in India today marking one of the biggest launches for Digital India. While the new plans and offerings are going to be disruptive, the launch has gained a variety of reactions. Telecom analyst Tanu Sharma, Associate Director – Large Corporates, India Ratings & Research said, “India Ratings & Research believes that data tariffs are bound to see a major correction due to disruptive launch of Reliance Jio Infocomm (RJio) while the benefits from higher data volumes as well as subscriber growth will be back-ended. The existing top telcos (Bharti Airtel, Vodafone and Idea) have already undertaken pre-emptive price cuts by offering higher data volumes for similar pricing to retain their customers. India-Ratings believes that Reliance Jio launch will accelerate 4G adoption in India helped by its attractive tariffs, low cost handset pricing, perceived superior quality of services driven by its huge investment in network. RJio may look to disrupt some of the prominent geographies of existing operators, leading to a re-distribution of the market share which is concentrated among the top three operators, in FY17. The operators’ debt profile will deteriorate in FY17 as the agency expects them to incur high capex on network expansion and acquisition of additional spectrum to compete with RJio.” Airtel, being one of the biggest competitors for Jio gave a somewhat warm reaction by saying, “We welcome Reliance Jio’s entry to the digital world and wish them the very best. We also welcome Jio’s call to leading operators to work together. As a responsible operator we will fulfill all our regulatory obligations as we have always done. Over the last 20 years, Airtel has been contributing towards building a digitally enabled India and remains fully committed to and take leadership in supporting the Government’s Digital India vision. We will continue to innovate and deliver best-in-class products and services to our customers.” Even Vodafone reacted by saying “We have always offered great value to our customers, backed by excellent customer service, a nationwide presence, and Vodafone SuperNet – our best network ever. We will continue to do so for our hundreds of million customers across the country.”
Prashant Singhal, Global Telecommunication Leader, EY “For a price sensitive market like India, launch of affordable data services and free voice calls is indeed a welcome step. This is expected to drive greater data adoption across segments. The telecoms sector is currently reeling under financial stress, high debt burden and slowdown in revenue growth. Further decline in data tariffs may impact operators ’ profitability and sustainability. Telcos form the backbone of ‘Digital India’ and they need to make higher investments in data network. Any market erosion, at this stage, may impact the outcome of the upcoming Rs 800 bn spectrum auction critical for the Digital India vision.”
Disclaimer: Reliance Jio is owned by Reliance Industries, who also own Network18, the publisher of Firstpost and tech2