19 July 2019 9:08 AM GMT
NEW DELHI: Reliance Jio Infocomm has extended the deadline for subscriptions to its paid plans till April 15, and offered its services practically for free till June end to all those who register in that time, intensifying a brutal price war being waged in the market.
So, those enrolling into Jio Prime by April 15 by paying Rs 99 along with their first purchase of the telco's Rs 303 or other plans of higher amounts will get services till June end on a "complimentary basis," under the "Summer Surprise" offer, the company said in a statement Friday.
Subscribers who have already registered for Jio Prime would be automatically shifted to the "Summer Surprise" offer. The paid tariff plan will be applied only in July, after the expiry of the complimentary service, Jio added.
So far, over 72 million subscribers have opted for Prime membership, and Jio expects more of its over 100 million users and new ones to register for its services by mid-April.
"Jio's free service period is coming to an end. Users who do not recharge by the extended date of 15th April will experience degradation and/or discontinuation of services," Mukesh Ambani, chairman of Reliance Industries – parent of Jio – said in the statement.
"This extension (till April 15) will provide the necessary breathing room for users to avoid service disruption during the transition from free to paid services," he added.
He further said that the company was aware of some pockets of congestion on its network, but said that services will see a "dramatic" improvement in the coming weeks as the telco invests more in its network expansion.
Jio, which has already invested over Rs 200,000 crore in its business, will double its telecom tower network by another 100,000 in the coming months, Ambani said.
Jio's six months of free services - which started on September 5 and ended March 31 - had netted the telco over 100 million users and in the process hurt the industry's revenue and profitability and forced players – big ones such as Vodafone India and Idea Cellular, and smaller ones such as Reliance Communications, Aircel and MTS – to merge among themselves, and some like Telenor to exit totally.
While the incumbents were looking forward to Jio starting to charge for its services – albeit at sharp discounts – the latest offer will heap more pressure on the likes of Bharti Airtel, Vodafone India and Idea to come up with offers to keep their subscribers from switching over. And any such move will further dent their profitability at a time they need to invest to expand their 4G networks, say analysts.
"In a way Jio is continuing its free services, which will further negatively impact the industry which is already under great financial stress," Jaideep Ghosh, partner, management consulting, KPMG India.
On February 21, Ambani announced Prime membership to customers on board for a payment of a one-time fee of Rs 99. The membership, available for one year, gives the customers an option to choose from multiple data packs starting from Rs 149.
Jio, which launched services on September 5, disrupted the Indian telecom industry with its 'Welcome' and 'Happy New Year' offers which offered free voice and data services along with access to its digital content ecosystem.
And analysts expect further impact on coffers of telcos.
"It is directed towards keeping the subscriber ramp up tempo going because any raising of prices would possibly impeded the take up, Therefore, this helps the take up of subscribers," Sandip Das, senior advisor, Analysys Mason and a former Jio chief executive, said.
He expects pricing in the market to remain disrupted as players try to gain market share or hold on to existing market share.
"For the next 12-18 months, it will be tough time for telcos. At one side they would need to continue to invest in data, but will see their revenue spiral downwards. With rising industry debt level, coupled with lowering of the prices, the finances will be seriously stretched," Das said.
Market leader Bharti Airtel's saw its net profit plunge 55% in the October-December quarter while Vodafone India posted a 1.9% drop in service revenue in the same period, No. 3 Idea posted its first net loss since listing in 2007.
"October-December numbers including quarterly revenue, profits, subscribers, data usage, had dipped for most telcos. While the same number are expected to dip in January-March, the decline that was anticipated to stabilise in the coming quarter, will now follow the same trend as the preceding quarters," said a senior analyst who did not want to be quoted.
Shares of Reliance Industries, the parent group of Reliance Jio Infocomm shot up on Friday by 3.93% to close at Rs 1319.20, on expectations of an end to Jio's free services.