CHENNAI: The announcement of Reliance Jio’s TV-cable for the JioPhone is set to throw a spanner in the works of the able and Direct-to-Home industry.
According to experts in the sector, Jio’s plan to provide TV services through the JioPhone for Rs 309 per month is a threat to established players, most of whose stock crashed hard right after the announcement on Friday.
TV service majors like Dish TV (-5.85%), Sun TV Network (-3.5) and Hathway Cable and Datacom Ltd (-3.44%) all closed the trading day in the red.
“It is a threat for the entire cable TV space,” acknowledged Nitasha Shankar, Senior Vice President and Head of Research, YES Securities (I) Ltd said in an television interview.
“Of course with Jio coming in there would be a disruption as far as pricing is concerned,” she added, pointing out that if the entire Reliance TV on your phone, you just plug and play -- a huge advantage over paying for a set-top-box installation.
Other experts also point out that Jio’s pricing will not just affect large scale firms.
“Many of our last mile distributors will be affected badly if Jio plans work out,” said a senior official in a cable major. “However, a lot of their success will depend on whether they will be able to sustain the quality of broadcast through their 4G data networks, especially on large TVs.”
Companies that cater to low-income customers might also not be impacted much. According to research note from Bank of America Merrill Lynch, Jio might not be able to penetrate the mass market with the offer, because it was “too steep”.
But many firms will be affected, because of the impact on their top lines and bottom lines due to ongoing issues related to digitization of networks. And while digitization will be a net positive for the industry in the long term, Jio’s new offer might lead to disruption in pricing, hitting firms’ earnings in the next few quarters.