Reliance Jio turns up the heat on rivals with free offer extension
- Sushma Swaraj meets Wang Yi to discuss India-China ties
- Brouhaha should not be created over rape cases in big country like India: Santosh Gangwar
- Sitaram Yechury re-elected as CPI(M) general secretary
- 31 killed in suicide attack on Kabul voter registration centre
- Air India flight faces turbulence, leaves 3 passengers injured, window panel comes off
New Delhi: Reliance Jio Infocomm Ltd will provide free voice calling, text messaging and data services until the end of March, extending its inaugural offer by three months, as it seeks to win more customers from rivals it says are trying to undermine its network.
Mukesh Ambani, chairman of Jio’s parent Reliance Industries Ltd (RIL), on Thursday said both new customers signing up after 4 December and all 52 million existing subscribers will be eligible for the “Happy New Year” offer.
“Every new Jio user will get Jio’s data, voice, video and the full bouquet of Jio applications and content, absolutely free, till 31st March 2017,” Ambani said in a televised speech. “All our 52 million-plus Jio Welcome Offer users will continue to enjoy the unlimited benefits of Jio Welcome Offer till 31st December 2016. And on the new year’s day, all Jio Welcome Offer users will be automatically signed up for the Jio Happy New Year Offer as well.”
The extension could hit revenue growth in a telecom industry where intense competition has already taken its toll. Rivals such as Bharti Airtel Ltd and Vodafone India Ltd have responded with sharp tariff cuts to retain customers as Reliance Jio, which debuted in September, unveiled tariffs as low as Rs149 a month for data and free mobile voice calls and roaming.
Telecom sector revenue growth slowed to 4.4% in the September quarter from 6.5% in the year-ago period, according to data from the Telecom Regulatory Authority of India (Trai).
“We continue to stay cautious on the Indian telecom sector, with sustained pressure from the entry of large capacity new entrant Jio. We believe the true impact on incumbent revenue will be known only after Jio starts charging customers (now pushed back to April 2017),” Credit Suisse wrote in a report on Thursday.
Ambani also announced home delivery of Jio SIM cards and making mobile number portability easier for quicker sign-ups. The data usage cap under fair usage policy per day has been reduced from 4GB earlier to 1GB, in an attempt to clear network congestion and provide better speeds to Jio customers. The company has nearly 80% of its users consuming less than 1GB of data on a daily basis.
“The phase up till now was a trial phase for Reliance Jio to acquire customers. Now that they have received feedback, the company is resolving problems and wants to give good customer experience to ensure they retain these users,” said Amresh Nandan, a research analyst at Gartner Inc.
In the televised speech Thursday, Ambani said the benefits of Reliance Jio’s superior 4G technology has been denied to customers by what he described as the anti-competitive behaviour of incumbent operators.
He claimed the top three telecom companies—Airtel, Vodafone and Idea Cellular Ltd—had blocked nine billion calls made on Jio’s network to their networks. The existing telecom players have accused Reliance Jio of following predatory pricing and non-compliance with pricing and tariff norms.
Even so, the call drop rate for Jio has come down to 20% from an earlier 90%, Ambani said, and the company is monitoring the release of points of intersection (PoIs) by rivals.
Analysts at Bank of America-Merill Lynch (BofA-ML) said the free voice call offer will have a significant impact on voice revenue in the third and fourth quarters since incumbents are releasing more points of interconnection to Jio, which will improve the service quality.
“With telcos providing additional points of interconnection (PoIs), the call set-up issues faced by Reliance Jio have eased (from 90% at the launch of service to 20% currently), which is likely to put pressure on the voice revenues of the telcos till Jio’s welcome offer continues,” said a BofA-ML report on Thursday.
Reliance Jio also announced the launch of the Jio Money Merchant app to enable digital transactions for merchants and person-to-person money transfers. The application will be active from 5 December. The company aims to sign up 10 million small merchant retailers in coming weeks.
“Now most small and medium business enterprises have been forced to take up digital payments due to demonetization. With the free services offer, Reliance Jio is inviting these small and medium businesses to enrol on its network,” an industry expert said on condition of anonymity.
On Thursday, Bharti Airtel Ltd shares fell 1.66% to Rs319.10 and Idea Cellular dropped 5.93% to Rs72.95 on a day the BSE’s benchmark Sensex retreated 0.35% to 26,559.92 points.
Bloomberg contributed to this story.