Reliance Jio impact: Here’s how Airtel, Vodafone & Idea may suffer losses to counter ‘Prime’ offers

By: | Updated: April 3, 2017 5:27 PM

Newcomer Reliance Jio's latest offering is expected to compel incumbent operators to respond with aggressive counter-offers to retain their customers, turning up the competitive heat in the sector, say analysts.

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Newcomer Reliance Jio’s latest offering is expected to compel incumbent operators to respond with aggressive counter-offers to retain their customers, turning up the competitive heat in the sector, say analysts. “We believe incumbents would make comparable offers to their high-value subscribers even at the cost of short-term revenue loss. The three incumbents (Bharti, Idea and Vodafone) have sufficient 4G spectrum to compete against Jio,” Deutsche Bank Markets Research said in its latest report. The incumbent operators are likely to remain tactical in response, it added. The three operators declined to comment.

Billionaire Mukesh Ambani’s Reliance Jio, on March 31, announced it had notched an unprecedented 72 million paid subscribers, and extended by a fortnight its deadline for migrating other subscribers to its paid offer. It has further sweetened the deal by announcing a ‘complimentary offer’ for three months to those who pay Rs 303 prior to April 15, thus offering data at rock-bottom prices.

Also read | Reliance Jio Prime Rs 303 vs Vodafone Rs 346 vs Airtel Rs 349 vs Idea Rs 348 vs BSNL Rs 249: A comparison of internet data plans

Put simply, subscribers recharging prior to the said date using Jio’s Rs 303 plan (or any higher value plan) will get services for the initial three months on a ‘complimentary basis’, and paid tariff plan will kick-in only in July.

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In its report, Citi Research said that it expects the competitive intensity in telecom sector to remain high. “The high conversion rate of Jio’s subscribers opting for the ‘Prime’ offer is likely to force incumbents to react in order to reduce churn, especially at the mid-to high-end. Our checks had shown that while incumbents had introduced plans to counter Jio, these were not being marketed aggressively. This could now change,” Citi has said.

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