The brokerage said that at current tariff plans, upgrades by basic JioPhone users to JioPhone Next could boost Jio’s FY23 revenue estimates by up to 10%, while for
, churn among smartphone users could hurt its India-mobile FY23 revenue estimates by 2-3%.
Reliance Jio has 12-72% higher tariffs for smartphone users as compared to JioPhone users.
JioPhone Next is set to launch on September 10. ET has earlier reported that the effective price of the device could be in a Rs 3,500-4000 range.
“While we see limited risks among Bharti’s 2G users, assuming that 25% of its prepaid data users have a sub-US$100 device and 25% of these churn out due to potentially aggressive tariffs bundled with JioPhone Next, then our FY23 India mobile revenue estimates for Bharti could be hit by 2-3%,” the brokerage said.
It added that smartphone users with devices priced above US$100 are unlikely to opt for a sub US$100 device. That leaves 25% of smartphone users, i.e. 105 million smartphones, 115 million JioPhone users and 320 million feature phone users as the addressable market for JioPhone Next.
“Assuming replacement cycle of two years for smartphones and three years for JioPhone/feature phones, the addressable market for JioPhone Next could be 200 million devices annually,” the brokerage said.
Since FY17, the smartphone market has steadily moved toward more expensive handsets. This is evident from the rising average selling prices (ASPs) and nearly 75% of smartphones being priced above US$100.
“This can be attributed to slowdown in migration of feature phone users to smartphones due to the launch of the JioPhone in 2018, which resulted in a fall in share of sub-US$100 devices in the smartphone market and existing smartphone users upgrading devices at the time of replacement,” Jefferies said.
Since its launch, Jio has focused on growing the number of data users in India and raising their data engagement. With sharp cuts on smartphone data tariffs since its launch in 2016, Jio has raised data penetration among smartphone users to above 100%. In the featurephone segment, data penetration and engagement remain low.
The JioPhone launch was the first step in boosting data users and continues to drive data user growth. “JioPhone Next will help Reliance boost data engagement/usage among existing JioPhone users as it will offer them unfettered access to the Android ecosystem,” the brokerage said.
