Following Reliance Jio Infocomm’s offer of Rs 49 per month, the country’s top three telecom companies Bharti Airtel, Vodafone India, and Idea Cellular, have shifted to low-cost VoLTE 4G network from 2G network. Market analysts say that these companies have to do this to save the RPU on the ever-falling average revenue.
They say that on the recent Jiophone offer, 2G voice customers across the country can attract. It offers a free voice for the lifetime and 1 GB of data with a validity of 28 days. Now there are a large number of people who are using 2G service due to the high cost of 4G.
Brokerage firm JP Morgan said that due to this plan, a large number of Airtel, Vodafone and Idea users could shift to Jio. Jio’s Feature phone offer is 30–35% cheaper than that of other telecom companies. This will worsen the financial condition of the telecom players.
The American Brokerage House said that more than 70% of mobile users in India use the 2G feature phones and the telecom sector gets 50% of their earnings. Brokerage firm Motilal Oswal said, “The latest Jio Phone plan is available at 10% discount for the average feature phone customer.”
The telecom sector is already running a pricing war. The industry has a debt of 5 lakh crore. In the December 2017 quarter, the telecom companies’ results were poor.
Major telecom giants such as Bharti Airtel, Vodafone, and Idea Cellular rolled out cashback offers on 4G smartphones which ultimately reduced the price of the device to below Rs 1,000.
Reliance Jio from the day of its launch has been destructive to the other key players, as the company has targeted the key focus of area of the users which is affordability and making data usage habitual.