Jio’s unlimited free calls may lure voice customers from competitors

Reliance Jio Infocomm’s (Jio) introduction of lifetime free calls is aimed at luring voice customers from rivals Bharti Airtel, Vodafone and Idea Cellular, who derive more than 70 per cent of their mobile services revenue from the voice business, analysts said.

“We see a good amount of migration happening from the current incumbents till the free period, or December 31, as Indian consumers are price-sensitive,” KPMG partner Jaideep Ghosh said in an interview. “After the free period, we have to see if Jio is able to retain customers as the incumbent telcos will not take it lying down and come with better offers triggering a price war.”

Jio’s introductory free offer, which includes high-speed fourth-generation data access, is aimed at helping add a million subscribers a day, with the goal of crossing 100 million by December 31, and garnering a 10 per cent share of the more than one billion mobile users in the country. After the offer period, Jio plans to charge Rs.149 for unlimited voice calls with 300 MB of data.

“With Rs.149 entry-level offer, Jio’s average revenue per user (ARPU) will be much higher than the existing players,” Mr. Ghosh said. “The industry average is only Rs.125 per user, most of which comes from voice.”

Rajan Mathews, director general of the Cellular Operators Association of India, has said Jio’s free calls offer glosses over the fact that the tariffs bundle data and voice. Jio has replied that the data used for the voice calls will neither be charged nor deducted from the data balance of subscribers. “Domestic voice calls to any network across the country, both local as well as while roaming nationally, will be completely free for Jio subscribers forever,” Jio said.

Jio will start getting revenue from its mobile services starting January and expects to earn revenue of between Rs.36,000 crore and Rs.50,000 crore in the fiscal period starting April 1, 2017, its first full year of commercial operations.

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Source:The hindu

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