Reliance Jio to retain majority of users after free services end: survey
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New Delhi: The majority of Reliance Jio Infocomm Ltd users will stay on even after the free services end, a Bank of America Merrill Lynch (BAML) survey found, countering the perception that customers will leave once they are asked to pay up.
The brokerage firm’s findings are based on a survey of as many as 1,000 customers in December, aimed at understanding the change in consumer behaviour. At least 99% of customers, BAML surveyed, used a smartphone and 78% of the users have monthly bills above Rs250.
“An overwhelming majority– over 85%—of Jio users will continue as paid consumers after the expiry of free offer. A further 8% could continue if voice issue is fixed–implying just over 6% exhibiting reluctance to continue with Jio,” BAML said in its report dated 4 January.
BAML said that its survey indicates that Jio’s free service is gaining reasonable traction with 26% using Jio as primary SIM and 21% as secondary SIM.
“55% of the surveyed users find Jio speeds higher than that of other telcos,” the brokerage said, adding voice calling continues to be an issue, with only 22% surveyed users expressing satisfaction.
Jio’s data transfer speed appears to be a bigger attraction than tariffs. The biggest reason for users to test Jio during the free offer period was not that it was free but that its data speeds were higher. Interestingly, a significant number cited Jio’s free content as a reason to use it. Over 60% respondents would upgrade their current phones to use Jio.
Interestingly, 67% said they will use Jio as secondary SIM/dongle and 18% will use it as a primary one when Jio’s free offer ends..
“If our survey is indicative, Jio should be able to retain the majority of customers,” the report said.
To be sure, Jio is in a tug of war with market leader Bharti Airtel Ltd, which has moved the Telecom Disputes Settlement and Appellate Tribunal against Reliance Jio’s extended free services offer. Jio first launched with a “Free welcome offer” that was to expire on 31 December and later extended it by tweaking it into a “Happy New year offer” that now expires on 31 March.
Airtel has alleged the extension was wrong and beyond the stipulated 90 days allowed for promotional offers and also accused the Telecom Regulatory Authority of India (Trai) of acting as a “mute spectator” to the course of events. The company accused Reliance Jio of following predatory pricing by offering services for free.
In response, Airtel too, has introduced promotional free calls and data to anyone switching to its network, in an attempt to counter free services from Reliance Jio, available until 31 March.
In its report, BAML said customer satisfaction continues to be strong for incumbents but it found that “Bharti is trying to create a perception through marketing gimmicks/new packages that its tariffs are at par/cheaper than Jio”.
“In our view, other telcos will follow up, leading to higher competitive intensity,” BAML said.