The launch of Reliance Jio Infocomm Ltd.'s 4G-enabled feature phone will help reverse the moderation in subscriber additions and support revenue growth, according to brokerage firm CLSA.
"Our channel checks indicate that a 4G feature phone launch by Jio is imminent", the brokerage said in a July 11 report. The feature phone by Reliance Jio, though locked to the network, will support Voice over LTE (VoLTE) and have a suite of data applications, CLSA added.
A feature phone incorporates basic features like calling, internet access and music but lacks the advanced functions of a smartphone.
The Mukesh Ambani-backed telecom operator, with its free services, had seen subscriber base grow to 11.3 crore by April, but the rate of user addition slowed since it transitioned to paid services. Its active subscribers were less than the industry average in the same month.
The newest entrant in India's crowded telecom space is hitting the 4G device hurdle at a time when the penetration of such devices is already at 85 percent, CLSA said.
Feature phones still outsell smartphones in India with total shipments at around 13.6 crore compared to 11.3 crore for the latter in financial year 2016-17, according to the brokerage. "Our industry check indicate that there are around 500 million feature phone users in India", CLSA said, adding that 70 percent of these have a monthly average revenue per user of Rs 50 or lower.
Also Read: Reliance Jio's New Tariff Plans Will Help It Earn More From Every User
However, the remaining 30 percent are likely to have an average revenue per user of Rs 150-180 and contribute around 15-17 percent to the industry's revenue, it said. An additional 10 crore subscribers would boost Reliance Jio's market share to around 19-20 percent, more than the third largest operator Idea Cellular Ltd., according to CLSA.
The 4G feature phone is likely to be priced between Rs 500-1000 despite being "superior to currently available phones", the brokerage said. Jio could also bundle promotional tariff offers along with its feature phone.
The brokerage expects the telecom sector's revenue to fall 7 percent year-on-year in FY18 led by "promotions and retaliatory tariffs", and a rebound is likely only in FY19 when Reliance Jio starts charging customers fully.
Also Read: What Reliance Jio Needs To Break Even
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