Reliance Jio likely to continue free services till March: analysts .
Reliance Jio Infocomm Ltd may extend its offer of free phone services to
customers till March, about three months later than its earlier plan of
ending free services on 31 December, parent Reliance Industries Ltd
told analysts.
“Mass scale free welcome offer could continue until March 2017 to
attract subscriber growth towards the celebrated 100 million mark with
RJio’s indicative data pricing at Rs130-140 per giga byte,” Motilal
Oswal analysts wrote in a 21 October note.
Reliance Industries’ management said that there were no restrictions on
the number of promotional offers a company can launch, analysts at Citi
Research said.
“If the situation with the points of interconnect pertaining to voice
calls persists with the incumbents, then they will look at innovative
solutions to ensure that users do not pay unless the quality of service
improves,” Citi Research analysts wrote in a note.
At a press conference after Reliance Industries reported its
second-quarter earnings on Thursday, Anshuman Thakur, head of strategy
and planning at Reliance Jio, said: “We have told Telecom Regulatory
Authority of India (Trai) and government that customers have faced
issues with regard to the quality of service due to the interconnection
congestion and they have not been able to enjoy the services that they
deserve and what we want to deliver to them. And till we are in a
position where we can deliver the quality of service as desired by the
Jio management, it will be unfair to charge the customer.”
Thakur added that Jio does not need permission from the telecom regulator to extend free services beyond December.
“Trai tariff is under forbearance. What Trai requires operators to do is
file the tariff plans with Trai so that if they have any comments they
can come back. This is post seven days of implementing the tariff. So
Trai does not need to approve but if it has any comment or observations
to make, or wants the operator to modify the plan in anyway, the
operator has to do that,” added Thakur.
Morgan Stanley Research in its 20 October research said, “Assuming Jio
delays the commercial launch, there could be 10% upside to its FY2017
consolidated numbers, as currently we assume launch to be in January
2017 leading to quarterly losses of $824 million in fourth quarter of
2017; in case of delay the losses are likely to be capitalised.”
RIL said on 20 October that the welcome offer on Jio that the company
had launched on 5 September will get over on 3 December but the benefits
of free data and calls will continue till 31 December. According to
Trai guidelines, a telecom operator cannot offer a promotional offer for
more than 90 days and hence Jio will have to stop the same by 3
December.
According to Edelweiss Securities, call failures on Jio’s network
continues to be severe (75 failures in 100 call attempts) given
inadequate release of points of interconnection by incumbent operators.
Edelweiss Securities added that Jio is targeting an average revenue per
user of Rs300-500 with a larger focus on middle class customers.
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