Mukesh Ambani Chairman and Managing Director of RIL, declared last day about Reliance Jio’s ‘2G free India‘ effort. Through the plan to make India ‘2G-mukth’, Jio is planning to win over 350 million 2G feature phone users by launching a smartphone at a budget price. This is sure to be a blow to other operators, especially Vodafone Idea because of its large base of 2G users.
As per March quarter calculations, Bharti Airtel has 135 million 2G users( 47% of its total subscriber base) and Vodafone Idea has 174 million 2G users(60% of its total subscriber base ). Airtel recently accumulated capital and is comfortable on the net debt to operating profit metric. But, the high leverage of Vodafone Idea will make it difficult to protect its market share.
Head of equity research at William O’Neil India, Mayuresh Joshi, said that Vodafone idea has the highest 2G subscribers compared to other operators. After the 43rd Annual General Meet of Reliance Jio last day, it was announced that they are planning for smartphone launch at a lower cost in partnership with Google. When this materializes it will hit hard on Vodafone. The company will be forced to raise its average revenue per user. Entry-level rural-based subscribers are more for Vodafone and it has the lowest ARPU in the sector.
Recent trading sessions showed a slip in the stock of Vodafone Idea and therefore, according to industry experts, it will be difficult for Vodafone Idea to survive.
According to experts, Jio dominates mobile broadband space. They can capture the industry with the offering of the budget smartphone in partnership with Google and also the introduction of Reliance Jio 5G.
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