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Kolkata: After recent pricing aggression around mobile postpaid schemes, Reliance Jio is now looking to disrupt rival Bharti Airtel’s home broadband as well as DTH (direct to home) TV businesses with a new, low-priced home broadband plan with attractive content bundling options, intensifying its push for higher revenue-generating premium customers, say analysts.
On Monday, Jio launched its most affordable home broadband plan, starting at Rs 198 a month, with extra bundled entertainment benefits for additional payments of Rs 100 and Rs 200 a month, in the run up to the Indian Premier League (IPL) cricket tournament starting, March 31. Customers, though, need to pay Rs 1,490 upfront for a 5-month JioFiber service that includes Rs 990 for data and other benefits and Rs 500 towards installation charges.
“Jio’s cheaper fiber broadband base plan is targeted at acquiring new users from peers, and this disruptive innovation at the bottom of the market will put pressure on Bharti Airtel and deflate ARPUs at the upper end of the market,” J P Morgan said.
This, it said, is since Jio’s Rs 198 a month base home broadband plan is much below Airtel’s Rs 499. The brokerage added that Jio has ensured there will be no downtrading internally as the latest JioFiber base plan is only available to new customers with speeds also throttled at 10Mbps. Jio’s current base plan for existing home broadband users, priced at Rs 399 a month, offers starter speeds of 30 Mbps.
BofA Securities said Jio is looking to replicate its mobile strategy of facilitating transition at very low cost. “In the mobile market, users first started using Jio as a secondary SIM and over time, many switched to Jio given better speeds/pricing…we think Jio is expecting a similar outcome as it’s aggressive broadband plan aims to target competitors.
ICICI Securities said Airtel will need to quickly match Jio as the latter’s affordable fibre broadband plan, with generous entertainment bundling options, is likely to impact the Sunil Mittal-led telco’s DTH business which had revenue and operating income of Rs 3,150 crore and Rs 2,100 crore respectively in FY22.
“Bharti’s DTH business will likely face disruption from Jio’s new fibre-to-the-home (FTTH) plan, and it will have to launch competing services, especially as its DTH revenue / Ebitda was on a decline due to the fall in user base with a shift to FTTH,” ICICI Securities said.
Earlier this month, Airtel had fortified its family postpaid offerings to counter Jio and ring fence its high-value postpaid user base. It also matched Jio by launching an unlimited 5G data offer to all postpaid customers as well as prepaid ones on data plans of Rs 239 and above. All this, after Jio announced new postpaid schemes to grab Airtel and Vodafone Idea’s premium users.
Going forward, analysts said Jio’s new base home broadband plan offering premium bundled entertainment options, can trigger a wave of disruption in India’s pay TV market.
ICICI Securities expects Jio to disrupt the pay TV market as existing players won’t be able to match Jio’s latest home broadband offer. “This (plan) will help Jio accelerate its user base for FTTH services, while content bundling will aid in adoption of a converged digital ecosystem which can open new revenue opportunities.”
Analysts said Jio’s base FTTH plan with bundled content options could prove attractive to India’s 145 million-odd PayTV users, who currently shell out around Rs 300-400 a month for a normal, traditional TV pack in urban areas.
Customers opting for the new JioFiber base plan, can access six OTT apps/400 live TV channels for an extra Rs 100 a month, and 14 OTT apps/550 live TV channels for an extra Rs 200 a month. An added sweetner with Jio’s bundled entertainment offerings is a free 4K set-top box.
Some analysts, though, downplayed the immediate impact of Jio’s latest FTTH on Airtel’s homes services business, on grounds that Jio does not yet have a ubiquitous presence in the fibre broadband space and Airtel home services subscribers used to higher speeds (40Mbps+) are unlikely to downgrade to 10Mbps speeds, regardless of the sharply lower price. They, though, conceded that Airtel would need to offer competing services soon to hold on to its home broadband user base.
Latest data collated by Trai pegged Airtel and Jio’s home broadband user bases at 5.7 million and 7.7 million respectively as of end-December 2022.
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