‘JioFiber pricing may not be a blockbuster yet’September 6, 2019
Analysts say tariff plans may be tweaked if the roll-out is slower
The pricing of Reliance Jio’s broadband services JioFiber may not be as disruptive as it was in the case of the company’s mobile telephony service launched three years ago, according to analysts.
“Its target of 20 million homes in 18 months is aggressive and we expect the roll-out to be more gradual given that pricing is not as disruptive as in the case of mobile and challenges in roll-out,” wrote Jefferies in its research report.
“We believe its success will depend on customer service, including support during downtime and other issues. We expect incentives in terms of content to increase from the current announced ones to achieve the target roll-out. There would also likely be tweaking of plans if the roll-out is slower,” added Jefferies. On Thursday, Reliance Jio unveiled ‘JioFiber’ with monthly plans starting from ₹699 and going up to ₹8,499.
Reliance Jio is targeting 20 million homes and 16 million enterprises across 1,600 towns and aims to complete the roll-out in the next 18 months. Given the current fixed broadband subscriber base of 18 million, it implies doubling of the market.
Compared to Bharti Airtel, Jio’s pricing is 12-23% lower but is similar to or even higher than local players. “We expect maximum adoption of Bronze and Silver plans due to affordabilty,” said Abneesh Roy, executive vice-president, Edelweiss Securities.
Home broadband market in India is under-penetrated with only 18 million connections of which 50% are those of BSNL/MTNL. Also, only 7% of the connections are on fibre.
“There is no clarity on digital TV bundling yet. Although prices are lower than Airtel Xstream box offering, we will not call it disruptive from a pricing perspective. We believe that subscriber addition will be a function of reach, customer service and quality of the product. We believe that reaching 20 million subscribers outside its existing Den and Hathway network will be a slow process,” Mr. Roy added.
“We do not foresee free TV with annual plans as a big draw, and do not foresee a meaningful negative impact on pay TV operators like Airtel and exhibitors like PVR,” said Goldman Sachs.
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