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Analysts Say Jio’s Broadband Tariff Plans Will Have Limited Impact On Rivals

Most analysts said Reliance Jio Infocomm Ltd.’s tariff plans for its JioFiber broadband service are not “lucrative enough” and will have limited impact on incumbents.

Mukesh Ambani’s telecom operator offered six plans to users in the range of Rs 699 to Rs 8,499. If customers opt for an annual plan, they will get a broadband router, 4K set-top box, television set, first-day first-show movies and special sports content on selected plans and subscription to over-the-top apps—details of which are yet to be announced.

Data offered by Reliance Jio at higher speed is lower. Besides, analysts think the prices are not significantly lower. Thus, they don’t expect much churn and expansion in the broadband market.

Here’s what brokerages have to say about Reliance Jio’s new tariff plans for broadband services:

Macquarie

  • Plans are not lucrative enough.
  • Getting TV subscribers not having broadband connectivity on board will be challenging.
  • Expects churn in direct-to-home segment to be much lower than the street’s expectation.
  • Not much impact on PVR/Inox as movie premiere available on selected plans.

CLSA

  • JioFiber plans are 13-23 percent cheaper, data allowances are lower.
  • JioFiber is unlikely to expand the broadband market as pricing has not been lowered meaningfully.
  • Sees limited impact on Bharti Airtel Ltd. and Dish TV India Ltd.

Goldman Sachs

  • JioFiber plans are 13-23 percent cheaper, data allowances are lower.
  • Bharti Airtel could continue to see ARPU pressure; impact on PayTV and movie exhibitors low.
  • Low possibility of churn as customers are quite sticky.
  • Tariff hike in wireless segment towards end of financial year 2020.

Credit Suisse

  • Reliance Jio’s entry-level broadband pricing competitive.
  • No combo plans announced with cable and mobile.
  • If Reliance Jio achieves a target of 20 million subscribers, then broadband service could contribute $1.2 billion to Ebitda.
  • Higher speed should help in faster content downloads, multiplayer gaming, etc.

Jefferies

  • Pricing not disruptive; speeds offered are higher in low-end plans.
  • With pricing in line with peers, key for subscriber traction will be its reach and customer service.
  • Expects more incentives in terms of content.
  • Expects increased competitive intensity in postpaid and home/enterprise segment.―Bloomberg Quint
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