All about Reliance Jio 4G launch: World's lowest data tariff, ten big announcements, analysts take

01 September 2016, 10:05 PM

Storming his way into telecom sector, Mukesh Ambani, India’s richest man, on Thursday, 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.

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.

Targeting 100 million customers in the shortest span of time, he told Reliance Industries’ annual general meeting that its wireless phone unit, Reliance Jio Infocomm Ltd will offer data for Rs 50 per GB and monthly plan for as low as Rs 149.

Voice calling for Jio users will be free for life, so will be national roaming. “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.

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.

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.

Ten big announcements from the event:

# All domestic voice calls for Jio customers will be absolutely free. Roaming charges will also be zero across India.

#Jio aims to take India to the top 10 from current 155th position in the world for mobile broadband access.

# Jio has created an all-IP network. There is only one language spoken on the Jio network. We will have a single digital mother tongue. The all-IP design also makes Jio's network the most expansive and future-proof network in the country. Jio is a data strong network built for the Internet from the ground up. By March 2017, we will cover 90 per cent of India's population. It is the first mobile network that is only 4G LTE.

# The onboarding process will now be 100 per cent digital, using Adhaar-based e-KYC, starting today from Mumbai and Delhi. With instant e-KYC, customers will be able to walk out with an operational connection within 15 minutes.

# Jio apps bouquet will be available complimentary up to December 31 2017.

# Effective rate of data would be five paise per MB, or Rs 50 per GB.

# All complex telecom charges, like black-out days, eliminated.

# Jio's services will be free of cost to all users from September 5 to December 31, 2016.

# Jio's commercial launch likely to be on December 31.

# Special offers for students with 25 per cent more data.

Analysts take:

The analysts have said that Reliance Jio’s entry into the Indian telecom market will help in decreasing the monthly bills of comsumers. This would also unleash a new round of price war in the telecommunication industry.

RJio in its test phase has garnered over 1.5 million users and aims to take the number to 100 million “in the shortest possible time”. During his speech at the 42nd AGM of Reliance Industries, Mukesh Ambani said, “Indians can all do ‘Data-giri’, which is an opportunity for every Indian to do unlimited good things, with unlimited data.”

CRISIL Research said that by opting for Reliance Jio plans, mid-to-high end subscribers could see their average monthly mobile bills coming down by 50-60 per cent.

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.

First Published: Thursday, September 01, 2016 09:04 PM
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