Reliance’s game plan for Jio

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New Delhi: Mukesh Ambani’s Reliance Jio Infocomm Ltd isn’t targeting high-end consumers with its telecom services. At least its initial plan to sign up 100 million users in one year before the commercial launch suggests that it is combining high-speed data with low-to-mid range phones.

Reliance Jio’s Lyf mobile phones will be priced betweenRs.4,000 and Rs.19,000—a price segment that has products from a plethora of device makers who are aiming to capture a slice of the market, two people familiar with the matter said, requesting anonymity.

“It was a conscious decision to be in this range because this is where the maximum offtake happens in India. Secondly, if you see, India is becoming a single-device country. From home to workplace, a majority of the people consume news, videos on mobile phones; so people need good handsets and people want to invest in one product which is cheap and yet of good quality,” said one of the two people.

The unique selling proposition of these devices will be their ability to convert an ongoing voice call to a data call at a single command without interrupting or disconnecting the call.

Other attractions of the platform include Jio Money, a payment application. Besides payments, the service will also cover customer services in e-health, e-commerce and e-education.

Jio Play, a 24×7 catch on television for users with all channels and a backup of seven days and zero buffering time lags, will also be available.

The company has tied up with a public health centre in Punjab where it is currently testing its e-health services. A patient, for example, can be examined through a video call, and diagnosis can be done even if the patient does not have a record of his past illness.

“So, the bottom line is there is enough appetite in the market for data, and people will find innovative uses of the same,” said the first person cited above.

According to Vishal Tripathi, research director at Gartner Inc., it will be interesting to find out how lucrative are the bundling of 4G data services that Reliance Jio will offer as India is still warming up to the idea of content consumption for a variety of uses.

“So, what Jio does beyond content with 4G and unlimited Internet would be a key driver,” Tripathi said.

But Tripathi has reservations about Jio services being available only on Lyf phones in the beginning.

“This is questionable as people will not leave their smartphones and shift to their (Reliance Jio’s) devices. Somebody who purchased a Rs.6,000 smartphone would hesitate to spend an amount again to purchase a Lyf phone,” Tripathi added.

To be sure, bundling smartphones with services has not been too successful in the Indian market.

“So, if Jio aims to introduce bundling, what is their price and service points to recover capital cost, and if they follow the other model, then there is nothing new to offer as the market is already full with such devices. Also, will they be able to generate that kind of ARPU (average revenue per user) to match the cost of bundling?” said a sector expert who also requested anonymity.

The stakes are high. Mukesh Ambani has made the sector’s biggest bet by investing $22 billion (about Rs.1.5 trillion) in Jio, which is effectively his second coming to the sector.

Mukesh Ambani launched Reliance Infocomm Ltd, now Reliance Communications Ltd and run by his younger brother Anil Ambani, in 2002.

The scale of investments in the venture by parent Reliance Industries Ltd (RIL) has already raised concerns among investors. But the large capital investments has ensured that Reliance Jio has the highest quantity of 4G spectrum, access to the widest optical fibre network in India and superior technology.

“We know there is a delay (in the launch of Reliance Jio services), but we want to give it our best shot,” said the person cited above.

Initially, these services will only be provided through Lyf devices but the company is also testing the services with products of at least 40 device makers, including Samsung Electronics Co. and Lenovo Group Ltd.

Reliance Retail’s LYF emerged as India’s fifth-largest smartphone brand by volume in the first quarter post launch, creating a flutter in India—the world’s fastest growing smartphone market that is led by Samsung, according to data from Counterpoint Research.

Normally, Reliance Jio plans to offer Internet speed of 8-10 mbps. Additionally, the firm has come up with 500,000 sq.ft data centre space already operational in Navi Mumbai, Nagpur and Noida, and it plans to add another 500,000 sq. ft before its official commercial launch—due in four-to-five months.

“The purpose of these data centres is to work as storage capacity and server for all the applications residing on their network,” said the person aware of Jio’s plans.