Telecom industry analysts have revealed the likely impact on revenue of Reliance Jio and Airtel India following the launch of JioFiber, the low-cost FTTH broadband offer from Jio, across India.
Reliance Jio claimed that has 0.5 million customers who are currently using its free home broadband services. Jio aims to reach 20 million residences in 1500 towns. India has 18 million home broadband customers in India at present. Jio will reach 8 million broadband subscribers by fiscal 2023, vs Airtel at 3 million, Goldman Sachs report said.
The report indicates that BSNL will be facing the heat in its home broadband market and Airtel, currently the #1 broadband operator, will continue to grow its share of business despite competition from Reliance Jio.
Free TV may not be a big draw as Jiofiber subscribers have to make an initial payment of Rs 2,500. Free television on plans starting at Rs 1,299 per month – with minimum upfront commitment of Rs 35,000 including taxes may appeal to a very limited set of consumers.
Jio is offering a 24-inch television with some plans. Amazon.in is selling 24-inch televisions in India at a starting price of Rs 5,000. Jio’s target homes of 20 million are likely to already have an HD or UHD television and most consumers may not be willing to commit a large upfront payment of Rs 35,000 amount for home broadband.
Jio is unlikely to have a stand-alone Pay TV offering (excluding existing Den/Hathway services), and given the Pay TV industry in India has more than 150 million subscribers, the risk from Jio to PayTV operators such as Airtel and Dish TV appears fairly low.
Jio also plans to launch a service by the middle of 2020 which will allow consumers to watch movies at their homes on the day of release. This service is available on plans starting Rs 2,499 per month (Rs 2,950 including taxes). Jio will not have more than a few hundred thousand subscribers on these plans.
Goldman Sachs report said it expects reduction in broadband ARPU for Airtel and the ARPU will reach Rs 742 by fiscal 2021. Airtel’s reported ARPU for home broadband in June 2019 was Rs 825 per month. Broadband segment contributed 2 percent / 4 percent of Airtel’s revenue / EBITDA in fiscal 2019. The report said Airtel’s ARPU is broadly in line with Jio’s second cheapest plan of Rs 849.
Airtel’s broadband ARPU fell 27 percent in the last two years. There will be another 10 percent dip over the next 12 months. Since Airtel will be upgrading its customers to higher bandwidth offerings, there will be low possibility of churn.
IIFL said JIO has announced six FTTH plans ranging from Rs 699 / month to Rs 8499 / month at speeds ranging from 100Mbps to 1Gbps. Speeds will be throttled to 1Mbps once the monthly allowance is reached.
The Rs 699 / 849 (plus GST) broadband plans are likely to be the most popular. The pricing is attractive for the Internet speeds, allowances and TV connection on offer, but not unduly low considering the Rs 825 home broadband ARPU for Airtel.
Jio will need to introduce lower priced plans. The appeal for Jio’s TV offering over fibre may be limited since Jio TV is available free of cost on mobile. First Day First Show movies are for customers on Rs 2499 / month plan and above, high enough to limit its traction and the impact on multiplexes.
Baburajan K
