Reliance Jio To Start Charging For Voice Calls After First 1,000 Minutes: CLSA


Reliance Jio Infocomm Ltd. will start charging for voice calls after first 1,000 minutes, according to a channel check conducted by foreign brokerage firm CLSA.

In financial analysis, a channel check is third-party research on a company’s business based on information collected from the distribution channels of the company.

CLSA Report Reliance Jio has limited free voice up to the first 1,000 minutes per month, after which only calls within the Jio network will be free.

Voice calls will be free within the Jio network and will be charged for other networks after crossing the limit. Jio also has included two more tariff plans – Rs 149 and Rs 499 — in the ‘Jio Prime Offer’, along with the earlier announced Rs 303 plan. The new Rs 149 plan offers two gigabytes (GB) of fourth generation (4G) data without any daily limit, while the Rs 499 plan offers 60 GB of 4G data with a daily limit of 2 GB.

The channel checks also revealed that the company could cancel the Jio Prime membership, if a user fails to do a minimum recharge of Rs 149 every month.

CLSA ReportJio Prime membership and its benefits could be cancelled unless a minimum recharge of Rs 149 is made every month.

The company is also offering higher validity and usage plans for Rs 999, Rs 1,999, Rs 4,999 and Rs 9,999, with validity for 60 days, 90 days, 180 days and 360 days, respectively, and data allowance of 60 GB, 125 GB, 350 GB and 750 GB without any daily limits, according to CLSA.

The company has already garnered 100 million subscribers in 170 days and is offering a recharge commission rate that is twice that of its competitors, the report added. The company will be offering higher commission rate of over 6 percent on recharges, compared with the industry average of 3 percent. This higher rate could help Jio increase its subscriber base.

CLSA Report High commission rates should provide an added push for high membership of Jio Prime and allow Jio to start with a high chargeable subscriber base.

Reliance Jio owns largest 4G spectrum of 854 megahertz (Mhz) across three bands. CLSA believes that peers will fail to match Jio’s offers as they lack high capacity spectrum.

CLSA Report Given Reliance Jio’s huge capacity advantage, we believe incumbents may find it difficult to match this offer without impacting user experience on their networks.

The report also added that though Rs 149 may dilute the average revenue per user, but it could help Jio entice users into building habits of higher data and video usage. At the same time, some high data users would upgrade to higher plans as they may dislike the daily data limit of 1 GB.

Reliance Jio is expected to have positive earnings before interest, tax and depreciation and amortisation (EBITDA) in the first financial year, i.e., FY2017-18, with an average subscriber base of 50 million, according to CLSA.

Also Read: RIL Rallies As Analysts Get Clarity Over Reliance Jio’s Future Revenue

Reliance Jio’s entry has pushed the telecom sector into a consolidation mode. Vodafone Plc. has also announced its exploratory talks with the Aditya Birla Group’s telecom arm Idea Cellular Ltd. for a merger, Bharti Airtel Ltd. has entered into a definitive agreement to acquire Telenor (India) Communications Private Ltd.’s assets, and there are reports which suggest that Tata Teleservices Ltd. might join the merger between Reliance Communications Ltd. and Aircel.

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Reliance Jio To Start Charging For Voice Calls After First 1,000 Minutes: CLSA

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