Reliance’s JioBharat finds good initial response, but may not be enough to hurt Bharti Airtel badly- Analysts

Reliance’s JioBharat finds good initial response, but may not be enough to hurt Bharti Airtel badly: Analysts

Reliance Jio’s affordable 4G phone JioBharat may find good initial acceptance in the market, but will not significantly impact rival Bharti Airtel due to its own better offerings, customer loyalty, and service restrictions, among other reasons, said BNP Paribas in a research note. Reliance’s JioBharat is poised to attract a significant portion of the remaining 250 million 2G feature phone users in the country.Reliance’s JioBharat phone gets good initial market feedback…

The affordable 4G feature phone, priced at INR 999, has garnered positive feedback from trade checks, with demand reported at this price point due to the lack of alternatives in the market. The company aims to sell 1 million devices during the beta trial phase through physical distribution channels, and analysts believe it is likely to achieve this target comfortably.

Feature phone customers account for only around 15% of India’s mobile revenue for Airtel. As a result, the direct impact on Airtel’s revenue from JioBharat is limited.While the device’s price is attractive, Jio has offered better deals to customers in the past, such as the JioPhone, which had a better configuration and was available for a lower price during its initial years. This suggests that most remaining feature phone users have remained loyal to their current providers despite aggressive offers in the past.JioBharat’s service pricing at INR 123/28 days compares to INR 152/28 days for a similar plan on JioPhone but is more expensive than JioPhone’s base voice plan at INR 91/28 days, offering 3GB data. This indicates that the new device may not be suitable for heavy data users.Bharti Airtel’s pricing at the lower end has been at a premium compared to Jio’s, but even with a recent steep increase in its base pack plan, the company did not experience significant churn. The expectation is that this trend will continue despite Jio’s new plan being 30% cheaper, as it requires customers to purchase a new device.The device is exclusively compatible with Jio services, limiting customer flexibility. This lack of flexibility was also a concern with the JioPhone.Jio’s initial target of 1 million devices is relatively small, and even if it reaches 10 million devices, it would still account for only a fraction of India’s customer base and industry sales. The original JioPhone saw success with over 100 million devices, but JioBharat’s features and price may not have the same potential.Feature phone users may not find strong reason to switch to JioBharat

Considering these factors, BNP Paribas analysts believe that Bharti Airtel’s position in the market is unlikely to be significantly affected by the launch of JioBharat. While the new device is expected to attract some customers in its segment, the majority of feature phone users are not expected to churn in large numbers due to existing loyalties and limited benefits from switching to JioBharat’s offerings.