NEW DELHI: Reliance Jio’s competitors in the broadband internet segment may have less to fear than expected, with analysts noting on Friday that the price points for its new high-speed internet service — Jio Fiber — are not low enough to cause the kind of disruption Jio’s mobile services foray did three years ago.
The Mukesh Ambani-led company commercially launched the service on Thursday, with plans ranging from Rs 699 to Rs 8,499 per month, from the lowest speed (100 Mbps) to the highest (1 Gbps) respectively. The company also announced several introductory offers, including free flat-screen TVs and EMIs for certain customers.
However, a study of current market prices in the broadband segment shows that while Jio Fiber’s plans are priced between 13-23 per cent lower than Bharti Airtel’s, the amount of high-speed data being provided is also lower than the rival by around 20-40 per cent. CLSA analysts say this would effectively make Jio Fiber plans costlier by between 8-27 per cent when the quantum of high-speed data offered is concerned.
Analysts from several brokerages concur. According to Macquarie, the pricing is “not lucrative enough”, with the agency noting that Jio Fiber might find it hard to acquire TV customers who don’t already have a broadband connection. However, the average revenue per user for the segment is expected to fall as rivals reprice packages.
Jio Fiber’s free TV offers for annual subscribers under its Welcome Offer is also seen bringing little to the table as far as customer acquisition is concerned. American financial services major Goldman Sachs pointed out in a research note that while 24-inch TVs are available from just Rs 5,000 in the Indian market, Jio Fiber customers will get a similar model by committing over Rs 30,000.
The JioForever Gold annual plan, which is the cheapest plan offers a free 24-inch TV, costs RS 31,176 for two years. These factors are likely to make the quality of service and reach critical to Jio Fiber’s success. “With pricing in-line with peers, key for subscriber traction will be reach and customer service,” analysts from Jefferies wrote.