Why Analysts Expect Reliance Jio to Cut JioPhone’s Next Price


Reliance Jio Infocomm Ltd. has priced its budget smartphone, JioPhone Next, higher than expected, which could deter an upgrade for low-cost users.

According to analysts from research houses such as Jefferies, Kotak Securities and Emkay Global, the current pricing does not offer any material incentive for users of multifunction phones or JioPhone to upgrade to JioPhone Next. This is because low cost or no data subscribers may not be inclined to pay the upfront cost and monthly EMIs.

In addition, the recent offer from Bharti Airtel Ltd. to provide cashback of Rs 6,000 on multiple smartphones seems compelling and less costly to a customer overall than JioPhone Next, analysts said.

The telecommunications operator headed by Mukesh Ambani unveiled the new budget phone, co-developed with Google, on November 4 at Rs 6,499 ($ ​​87). This is higher than the previous estimate of 4,000 rupees. Buyers, according to a company statement, will also have the option of purchasing it in installments after an initial payment of Rs 1,999 and a processing fee of Rs 501. There are four EMI payment plans ranging from Rs 300 to Rs 600 on 18-24. month.

Emkay estimates the total cost to consumers across various EMI options at Rs 9,700-13,300.

The higher price, analysts said, could also be due to the current chip shortage. The carrier may reduce the price as handset availability improves with supply chain standardization or through various promotional programs if sales do not meet expectations.

Price puzzle

The screen size, processor speed and battery capacity of the JioPhone Next are smaller than those of entry-level smartphones, analysts said.

According to Kotak Securities, the comparative price of entry-level larger screen devices such as Redmi 9A, Realme C11 and Samsung M02 with a similar funding pattern and no upfront payment may make it difficult for JioPhone Next to become the smartphone of choice. at a lower price. – End 4G subscribers.

Jefferies said JioPhone’s specifications are quite similar to other smartphones in the under $ 100 price range and lower than devices in the 100-120 price range (Rs 7,500-9,000). So, lower prices among smartphone users using devices priced above $ 100 is unlikely.

More expensive plans

JPMorgan said the announced pricing plans for JioPhone Next are 11-18% higher than current plans offering similar data usage.

At current prices, Jefferies said, the addressable market is expected to contract more than 80% to 10.5 crore of low-end smartphone users. “The finance option involves a monthly interest rate of 2.5 to 3%, which is quite high. “

According to Emkay, the target audience for JioPhone Next would be mid-segment subscribers – customers using mobile phones in the Rs 5,000-8,000 range. initial cost of Rs 1,999 and high monthly IMEs. “

Other views on brokerage

  • Dolat Analysis has stated that Jio and Bharti Airtel’s offerings are not ARPU (Average Revenue Per User) dilutive and do not involve significant subsidies. But the competitive intensity to attract customers will continue.

  • Jio’s poor subscriber performance in August and September, coupled with potentially low adoption of JioPhone Next (until Reliance cuts its price), could lead to delays in rate increases, Jefferies said.

  • Strong acceptance of JioPhone Next in the replacement phone market could potentially pose a risk to Bharti Airtel’s subscriber base, Emkay said.

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