The wired telecom sector has created significant interest over the past few weeks with the entry of Reliance Jio. On September 5, 2019, JioFiber launched its service offerings starting at Rs 699 for 100 Mbps, or the Bronze pack, going up to Rs 8,499 for 1 Gbps, or the Titanium pack (please refer to annexure for details).
CRISIL Research believes the plans are unlikely to drive a significant churn in the market.
The lack of pricing aggression and non-attractive bundled pricing would result in limited disruption in the underpenetrated wired broadband market. Further, higher non-refundable deposit fee of Rs 2,500 and additional cost for premium content would also dampen prospects. Pricing for mid-size packs continues to remain higher than current wireless pricing on a per GB basis, thereby giving comfort that pricing in the wireless market would stabilise. JioFiber’s base plan starts at 100 Mbps for 100 GB data limit (+50 GB extra for six months). The base plan of most other wired broadband providers starts at 50 Mbps for almost the same amount of data, if not more.
While Jio’s pricing per GB is approximately Rs 4 for the base plan, rivals are also in a similar range. Government-owned BSNL’s is much lower at Rs 2. Among premium plans, JioFiber’s price per GB is approximately Rs 1.2-1.6, again in line with competitors.
We believe consolidation in the sector is also some time away. Further, emerging developments in terms of pricing in the television distribution space will remain a monitorable. So intense attrition is unlikely in the road ahead.