RJio’s ‘data-giri’ to unleash price war; slash bills: Analysts

RJio, which has been testing its network over the last few weeks, on Thursday said its users will not have to pay for voice calls and roaming, while data will be charged as low as one-tenth of the prevailing rates. At present, nearly 70 per cent of industry’s revenue comes from voice.

RIL’s telecom venture, Reliance Jio will offer 10 monthly plans to customers, starting at Rs 149, in a move that the company believes will trigger a boom in data services.

Speaking at the Reliance Industries’ 42th Annual General Meeting, Chairman Mukesh Ambani said data must be “affordable”, adding that Jio’s base rate will be one-tenth of the prevailing data rates.

 “In our data plans, the effective rates will be Rs 50 per GB...If you use more data, it will go down to Rs 25 per GB,” he said.

 Under Rs 149 plan, users will get free voice (local and STD), free roaming and 100 SMS alongwith 0.3 GB of 4G data.

 Under the Rs 4,999 plan, users will get 75GB of 4G data as well as unlimited 4G access at night for a period of 28 days. Other plans would be available for Rs 499, Rs 999, Rs 1,499, Rs 2,499, and Rs 3,999. All the plans, excluding the Rs 149 plan, will bundle in free unlimited SMSes.

“This announcement will unleash a price war among telcos, and users can expect cost of data (not voice) going down in the range of 25 35 per cent,” Greyhound Research Chief Analyst and CEO, Sanchit Gogia pointed out. He added this will further add bottomline pressures on the already struggling telcos that will ultimately be forced to consolidate.

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.

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.