Reliance Jio likely to continue free services till March: analysts
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Reliance Jio Infocomm Ltd may extend its offer of free phone services to customers till March, about three months later than its earlier plan of ending free services on 31 December, parent Reliance Industries Ltd told analysts.
“Mass scale free welcome offer could continue until March 2017 to attract subscriber growth towards the celebrated 100 million mark with RJio’s indicative data pricing at Rs130-140 per giga byte,” Motilal Oswal analysts wrote in a 21 October note.
Reliance Industries’ management said that there were no restrictions on the number of promotional offers a company can launch, analysts at Citi Research said.
“If the situation with the points of interconnect pertaining to voice calls persists with the incumbents, then they will look at innovative solutions to ensure that users do not pay unless the quality of service improves,” Citi Research analysts wrote in a note.
At a press conference after Reliance Industries reported its second-quarter earnings on Thursday, Anshuman Thakur, head of strategy and planning at Reliance Jio, said: “We have told Telecom Regulatory Authority of India (Trai) and government that customers have faced issues with regard to the quality of service due to the interconnection congestion and they have not been able to enjoy the services that they deserve and what we want to deliver to them. And till we are in a position where we can deliver the quality of service as desired by the Jio management, it will be unfair to charge the customer.”
Thakur added that Jio does not need permission from the telecom regulator to extend free services beyond December.
“Trai tariff is under forbearance. What Trai requires operators to do is file the tariff plans with Trai so that if they have any comments they can come back. This is post seven days of implementing the tariff. So Trai does not need to approve but if it has any comment or observations to make, or wants the operator to modify the plan in anyway, the operator has to do that,” added Thakur.
Morgan Stanley Research in its 20 October research said, “Assuming Jio delays the commercial launch, there could be 10% upside to its FY2017 consolidated numbers, as currently we assume launch to be in January 2017 leading to quarterly losses of $824 million in fourth quarter of 2017; in case of delay the losses are likely to be capitalised.”
RIL said on 20 October that the welcome offer on Jio that the company had launched on 5 September will get over on 3 December but the benefits of free data and calls will continue till 31 December. According to Trai guidelines, a telecom operator cannot offer a promotional offer for more than 90 days and hence Jio will have to stop the same by 3 December.
According to Edelweiss Securities, call failures on Jio’s network continues to be severe (75 failures in 100 call attempts) given inadequate release of points of interconnection by incumbent operators. Edelweiss Securities added that Jio is targeting an average revenue per user of Rs300-500 with a larger focus on middle class customers.