“Reliance Jio will help catalyze the development of the data market and eventually expand it. From our analysis, we believe that the incumbents will have to do the heavy-lifting themselves to lift the slowing data revenue growth trajectory,” an analysis by JP Morgan Asia Pacific Equity Research stated.
According to its analysis either the incumbents — Bharti, Vodafone and Idea — themselves need to take the lead to democratise and expand the data market in India without needing to lean heavily on Reliance Jio or the Indian wireless data market will change in complexion after Jio’s launch, catalyzing the development of new powerful paradigms in the data market.
“If we were to take the second thesis to be true, it would take some very strong industry growth assumptions for Reliance Jio to be able to create such a powerful wave by itself to be able to lift the data revenue growth sufficiently for the big three incumbents (Bharti, Vodafone, Idea),” it said.
According to CLSA, Jio will need to keep average revenue per users (ARPU) high, and also attract a large subscriber base, to ensure reasonable returns on its $22 billion telecom capital expenditure.
“We believe it will achieve this balance in its tariff strategy by milking its large capacity advantage and offering larger data and voice packets at the same monthly spend. This slashing of unit pricing and its engaging content apps may be used to entice subscribers to spend more,” it said.
Bank of America Merrill Lynch expects Reliance Jio to offer “unlimited VoLTE voice” bundled with its data at around Rs 300 per month.
Talking about the eco-system, Bank of America Merrill Lynch said: “As Jio’s empty network starts filling, we believe Jio will have to make more investments in towers, small-cells to maintain VoLTE quality and Jio would need a fallback option for seamless service, as it does not have underlying 2G or 3G network.”