With Reliance Jio’s new entry-level smartphone launched around Diwali not exactly being a disruptor in terms of pricing, rival operators like Bharti Airtel and Vodafone Idea can go ahead with further tariff hikes.
Analysts have viewed the new phone – JioPhone Next — comparable to other existing entry-level phones on an overall cost basis. According to Kotak Institutional Equities report, JioPhone Next seems a less attractive proposition when compared to Bharti Airtel’s recent cashback scheme on a wide variety of new 4G devices. “We believe that these plans are unlikely to cause any major disruption and hence, the stage seems set for the operators to raise tariffs for the prepaid smartphone segment and improve economics in due course,” Kotak said.
“The evident lack of pricing aggression with JioPhone Next is a welcome change and it may prevent any meaningful disruption for other telecom operators, in our view. The high upfront payment of Rs 2,500 may deter any large-scale upgrade for 2G subscribers; on the other hand, bigger-screen entry-level devices at a comparable cost with financing and no upfront payment may make it difficult for JioPhone Next to become the smartphone of choice at lower-end 4G subscribers,” analysts at Kotak have concluded.
The new JioPhone, which is an entry-level 4G smartphone, has been co-developed with Google and comes for a price of Rs 6,499. Consumers, however, have an option of paying processing fees of Rs 2,500 and 18-24 months EMI ranging from Rs 300-600 offering different levels of bundled data and voice services.
The total bundled cost of JioPhone Next is broadly comparable with entry-level devices of Redmi and Realme financed through other retail channels, if the user subscribes to Jio’s plans.
In fact, Bharti Airtel’s recent offer of providing back-ended cashback of Rs 6,000 on several smartphone devices seems less costly for a customer on an overall basis than JioPhone Next, according to Kotak’s analysis. Bharti’s scheme also provides flexibility to choose from several popular devices, which can be financed through other retail channels and a free screen replacement in the first year.
In recent time, both Bharti and Vodafone Idea have increased tariffs, which has seen their average revenue per user improving in the July-September quarter earnings. While Bharti had raised tariffs in the entry-level prepaid segment and for corporate users in the postpaid category; Vodafone Idea had raised tariffs in the entry-level prepaid segment.
Both the companies had said that they would not shy from taking the initiative to raise tariffs in certain segments as and when they feel the timing is right.