JioPhone Next – Throwback to JioPhone launch, ICICI Securities

Reliance Jio’s (RJio) much awaited handset, JioPhone Next, will be available from Diwali (4th Nov’21) on upfront payment of Rs1,999 and easy instalments across 18/24 months. Our calculations suggest the price is not disruptive, but comes with rich voice-first features. Pricing of the underlying services is also comparable, or at a premium to existing tariffs, which supports our argument for an early tariff hike. Our learning from JioPhone is that RJio will subsequently make the product more attractive with normalisation of the supply chain. Further, tariff hike in existing packs will make JioPhone Next services look more affordable in coming month(s). RJio has priced the new product such that it will help industry repair.

JioPhone Next price not disruptive, but comes with unique voice-first features. RJio has launched its much-awaited handset, JioPhone Next, which will be available from 4th Nov’21 onwards, with an easy financing scheme and popular packs. The upfront payment is of Rs1,999 and the rest via EMIs across 18/24 months along with service recharges. Monthly payment starts from Rs300 to Rs600. It also offers an option to pay the entire cost of Rs6,499 upfront. Price of JioPhone Next is not disruptive as mobiles with similar features are available in the market.

However, JioPhone Next has certain unique features that may attract users, such as optimised OS (Pragati OS) with access to Google Playstore. It is powered by Qualcomm processor, which is focused on delivering optimised connectivity and location technologies along with optimisations in device performance, audio and battery. It is built on technology to support voice-first capabilities, which includes read aloud, translate now, etc.

JioPhone Next ARPU will be at a premium to existing smartphones. Our calculations suggest underlying base prices for services are at a slight discount to the existing base pack; however, JioPhone Next has significant restriction on voice minutes. Monthly data use is limited to 5GB and just 100 minutes will cost Rs113-119 per month. This contrasts with the existing smartphone recharge of Rs129 (Rs138, adjusted for 30 days) and unlimited allowance of voice and 2GB of data. The most popular plan (1.5GB data per day) will cost Rs263-Rs269 per month, which is 23-26% higher than the existing price of Rs199 (Rs213, adjusted for 30 days).

Learning from JioPhone. JioPhone launch too was not much disruptive with upfront payment of Rs1,500 (refundable at end of three years) and monthly recharge of Rs153 (unlimited voice and 0.5GB data per day). However, RJio subsequently made it more attractive with introduction of the Rs49 plan, exchange offer (old featurephone + Rs699 to acquire a new JioPhone), Diwali dhamaka (JioPhone at Rs799) and various other offers over a period. We believe, as the supply chain for JioPhone Next normalises, RJio will enhance its appeal and aim at onboarding 100mn users. We expect the company to heavily focus on converting JioPhone customers (whose three years are approaching expiry) to JioPhone Next.

Implications on tariff hike. Service prices for JioPhone Next will become more attractive as tariffs increase. RJio has been anticipating a tariff hike in the smartphone category, which may come soon. In that case, JioPhone Next prices will look affordable and this will enable RJio to attract more users. This is an early implication of JioPhone Next on tariff hike, in our view.

CT Bureau