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Reliance JioFiber Offer Is A Game Changer, Says Fitch Ratings Nitin Soni

Reliance Jio, Mukesh Ambani-led Reliance Industries’ telecom arm, has commercially launched JioFiber, on the third anniversary of the Jio.

The much-talked-about fiber-to-the-home (FTTH) service has already received 5 lakh applications. JioFiber’s data speed will start from 100 Mbps and go all the way up to 1 Gbps. CNBC-TV18 spoke to telecom experts to get a sense of how JioFiber launch will impact competitors.

Rajiv Sharma, the co-head of research at SBI Capital said, “If you look at the average ARPU for Bharti Airtel, which is the most viable private operator in the home broadband space with a chunky fix line subscriber base, that is around Rs 830. Jio’s starting plan is around Rs 699-700. So it is not disruptive and this is pure home broadband; there is no TV included in this.”

“If you look at Jio’s plans, and if you look at the 12-month offers, the focus is dual. ARPU is a clear focus in this strategy and the second is stickiness. The idea seems to be to drive a higher number of pass through. Generally global average is you get only 20 percent of homes as a connection if you are passing through 100 homes. The idea seems to be more denser broadband coverage and get maybe 50 percent of homes in high ARPU,” Sharma added.

Nitin Soni, director-Asia Pacific TMT at Fitch Ratings, said, “Relative to the mobile market this is a market which still has a very small pie. So, this is a segment which still needs to grow significantly from hereon because we have only 5-7 million home subscribers whereas the addressable population could be anywhere around 250 million homes.”

“The offer from Jio is very compelling given the breadth of offering they have within the package including free voice, video calling, conferencing, gaming, etc. It is fair to say it is a game changer because right now the services which are offered by the incumbents is more like plain vanilla connectivity services with a bit of add-on related services. However, the breadth of offering that Jio is offering in this package at this price point is kind of revolutionary for an Indian consumer,” he added.

On the OTT services, Sharma said, “A lot will depend on the OTT offerings. While Jio is talking about OTT subscriptions for three months, there is not much clarity as to what are the details; is Netflix there, is Amazon there, because so far if you look at the mobility side, Jio has not partnered with Netflix or Amazon given that it itself wants to be a content platform.”

Speaking about the subscriber base, Soni said, “There could be a churn definitely given the offering at this price point is quite compelling. So, for consumers who are paying Rs 500-600 a month for plain connectivity services, they might as well pay Rs 700 for such a large offering.”

“20 million consumer target is quite a tough target, but given their market execution on the mobile side, I think it is maybe not that hard to achieve,” he added.―CNBC TV18

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