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Can Jio, Google create magic with the JioPhone Next?

The long awaited affordable smartphone from Reliance Jio in partnership with Google will be available from Diwali at a price of 6499 Rs or a prepayment of Rs 1,999 with monthly resting rates over 18 or 24 months.

But will it be able to entice the low 2G users who want to use a smartphone?

Analysts are skeptical about the price of the device as the goal is to move 2G users to entry level smartphones and for them it may not be a convincing offer to pay Rs 300 monthly for the device along with the data plan.

The affordable smartphone is crucial to target the majority of India’s 300 million feature phone users as Reliance Jio – Reliance’s telecom subsidiary – moves towards its targeted 500 million user base.

The first version of Jio Phone was launched in 2017 and the target was 500 million users of feature phones in India. Jio managed to sell around 100 million handsets so far, and the new smartphone, JioPhone Next, is expected to push low-cost customers up the value chain.

But the current price of the JioPhone Next is not disruptive, and it will be a daunting task to entice low-end ARPU users to switch to the JioPhone Next. “Cheaper smartphones are available. Rival telecommunications companies can double by collaborating with these handset brands. There will be exposure to Airtel, Vodafone Idea,” said Neil Shah, research analyst and partner at Counterpoint Research.

JioPhone Next will run on the Pragati operating system, powered by Google’s Android operating system and Qualcomm’s chipset. It will be offered across JioMart Digital’s network of more than 30,000 retail stores. The JioPhone Next has a 5.45-inch HD + screen with an 8MP front-facing camera protected by Corning Gorilla Glass 3. The device has a 13MP rear-facing camera.

The 4G device is powered by the Qualcomm Snapdragon 215 chipset up to 1.3 GHz, paired with 2 GB of RAM and 32 GB of internal storage. It holds a 3500mAh battery and can hold two nano-SIM cards.

JioPhone Next, unveiled at Reliance Industries’ general meeting in 2021, was expected to launch in September. However, the launch was postponed. The announcement of the JioPhone Next came amid a chipset shortage that has severely affected the global smartphone industry, causing shipments to fall 6% year-on-year in Q3, according to market trackers.

Analysts are also skeptical about Reliance Jio’s ability to go after any tariff increase following a steeper-than-expected drop in the customer base in the September quarter. Although higher earnings per. user and launch of JioPhone Next should protect downward risks at India’s largest telecommunications company.

The US brokerage firm Jefferies said Jio’s Q2 results were operationally weak and that the moderation in valuations was due to lower-than-expected revenue and higher-than-expected interest expenses. A repeat of its 2nd quarter subscriber performance in the 3rd quarter may destroy the hope of a tariff increase in the short / medium term.

Jio still fortified with 429.5 million users in the quarter ending September, compared to Airtel and Vi’s subscriber base of 321.23 million and 255.4 million, respectively, reported in the June quarter. Airtel and Vi have not yet reported earnings for the second quarter.

At the other end, there is action on the devices for not yet launched 5G technology. It is estimated that India’s 5G smartphone installed base will cross 35 million by the end of 2021 from over 17 million in August.

Analysts said prices are higher than what is available in the market and therefore will not be able to bring the disturbance it was intended for. They said that Airtel and Vodafone Idea may not have to worry much about Jio’s offerings as they can easily counter it with their bundled deals with handset brands.

About 37-40 million users will be on smartphones that support 5G technology by the end of 2021, 10 times higher than in 2020, despite the fact that there is no visibility on the rollout of next generation networks in India. In fact, sales of 5G smartphones are expected to cross 30% by volume and 50% by value during the festive season, amid a huge brand push and with consumers looking for future purchases.

However, Indian telecom operators have applied for a one-year extension to conduct 5G trials. Jio and Airtel had started their trials in June this year, while Vodafone Idea started the trials just a month ago. Telcos mentioned the lack of readiness of the 5G ecosystem partners as one of the reasons for seeking an extension of the trial period. But a one-year extension would mean 5G trials will continue until November 2022, and sales will be held thereafter, experts say. The government has said it plans to hold the next auctions in the January-March quarter of 2022.

By moving to the political side, Jio, which disrupted the telecommunications market with its entry into force in September 2016, has rejected the government’s moratorium on frequency and adjusted gross revenue (AGR) and has become the only telecommunications company to do so. Jio’s refusal comes at a time when both rivals Bharti Airtel and Vodafone Idea (Vi) have accepted both forms of moratorium.

No wonder, Mukesh Ambanis Jio is well placed to expand its 4G network and invest in new technologies in addition to providing fierce competition to the remaining private telecommunications companies.

“All three telecommunications companies want to extend their trials by another year,” an industry executive said. While Reliance Jio Infocomm and Bharti Airtel had begun their trials in June this year, Vodafone Idea started the trials just a month ago. MPT

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