Reliance’s plans for effectively free JioPhone sends Airtel, Idea shares tumbling
Airtel shares fell as much as 4%, the most intraday in 4 months, before closing 2% lower at Rs411.15 on BSE after RIL revealed its JioPhone plans at its 40th AGM
Mumbai: The Indian tycoon who punched his way into the country’s mobile phone industry by starting a carrier with free services took another swing at rivals, unveiling a cheap feature phone with access to unlimited data. Competitors’ shares plunged.
The wireless unit of billionaire Mukesh Ambani’s Reliance Industries Ltd (RIL) will offer a data-enabled feature phone for Rs1,500 starting 15 August, he told shareholders in Mumbai on Friday.
The Reliance Jio Infocomm handset, or JioPhone, will come with tariff plans as low as Rs23 for two days or Rs153 monthly.
Bharti Airtel India’s largest operator, fell as much as 4%, the most intraday in four months, before closing 2% lower at Rs411.15 in Mumbai.
Idea Cellular, which has agreed to merge with Vodafone Group Plc’s local unit to create the number one carrier, sank as much as 7.3% before closing at Rs91.90, lower by 3.11%.
Bharti Airtel and Idea didn’t immediately respond to email seeking comments.
“Voice will always be free on the JioPhone,” Ambani said at a shareholders’ meeting in Mumbai. “Jio will give users access to unlimited data on the JioPhone.” The data access will start 15 August, he said.
The move by Ambani, India’s richest person, opens a new front in a price war that is already prompting consolidation within a debt-strapped industry that includes 11 carriers. Rivals have cried foul against Jio’s tactics and have blamed widening losses on the new entrant.
Jio’s business practices will allow the upstart “to use its muscle power and price its services in a predatory manner to kill the rest of the industry and create a monopoly,” Bharti Airtel said in a 20 July statement.
Reliance is said to be in talks with I-phone assembler Foxconn to manufacture a mobile handset, ET Now said in a Twitter post Friday citing unidentified people familiar. The tweet didn’t say whether the tie up is for the JioPhone.
The phone is “effectively free,” said Ambani, because the initial Rs1,500 payment can be refunded after three years if the phone is returned. Bloomberg
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