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JioBharat Phone: Scaling Up Production as Jio Expands its Reach

After experiencing initial success with the product line, Reliance Jio is now extending the distribution of the JioBharat phone. This move could potentially delay any immediate increase in headline tariffs, which might be considered in the latter half of this financial year and beyond. The relentless focus on subscriber addition by Jio is expected to contribute to a wider user base, which may limit the immediate scope for raising average revenue per user through tariff increases.

JioBharat Phone

All About Production of JioBharat Phone

BNP Paribas, a brokerage firm, reported that the JioBharat platform is ready to scale up after a successful trial of 1 million devices, as revealed in Jio’s fiscal first quarter results. Earlier this month, Jio introduced the JioBharat, an internet-enabled feature phone, with the objective of capturing a significant portion of the 250-million-strong 2G user base in India.

Jio’s competitive pricing of the JioBharat phone at ₹999, along with recharge tariffs at a nearly 30% discount compared to competitors, is expected to drive higher subscriber additions in the target market, leading to potential market share gains. In fact, Jio’s revenue market share increased by 30 basis points in April, according to data from the Telecom Regulatory Authority of India. The telco highlighted its strong net port-ins during the quarter, which were 2.7 times higher than its nearest competitor.

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image 653 JioBharat Phone: Scaling Up Production as Jio Expands its Reach

Despite the growing user base and increased market share, one challenge for Jio lies in its ability to raise tariffs, especially in the near term. The focus on attracting new subscribers may reduce the likelihood of any immediate tariff hike, as noted by Citi in a report. However, analysts from JP Morgan attribute Jio’s gain in market share over Bharti to the accelerated 5G rollouts, whereas Bharti has been lagging in this aspect.

While Jio’s average revenue per user (ARPU) for the quarter that ended June 30 showed a marginal 1% sequential growth at ₹180.5, the absence of a tariff hike was cited as a factor. Analysts expect higher ARPU growth in FY24E and FY25E, aided by tariff increases, which they believe are not fully accounted for in their estimates.

image 656 JioBharat Phone: Scaling Up Production as Jio Expands its Reach

In addition to significant increases in the number of subscribers in its mobility business, Jio also observed substantial growth in its fiber-to-the-home (FTTH) business. During the June quarter, the company successfully added an estimated 800,000 to 900,000 subscriptions to its Jio Fiber FTTH base. Jio Fiber, together with the upcoming fixed wireless access (FWA) device called Jio AirFiber, is expected to strengthen Jio’s home broadband segment, with plans to target 100 million households in the next 2-3 years.

Overall, Jio’s aggressive approach to subscriber acquisition and the successful launch of JioBharat and Jio Fiber have positioned the company for potential growth, but the challenge remains in managing tariff increases while expanding its user base and services.

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