Jio 4G & DeMonetisation – Double Edge Sword Attack on Airtel, Vodafone, Idea Lobby

demonetisation-impact-on-wirelessThe cash crunch in the economy, driven by the government’s recent demonetisation of old Rs500 / 1,000 notes will impact telecom operators on several fronts. The move will impact prepaid subscriber recharges more (~80% of sector revenue and 95% of subscribers) as these are largely in cash. Industry channel checks suggest that there has been a sharp 20-50% drop in prepaid recharges since the demonetisation announcement as subscribers conserve cash.

Mobile Data Revenue to Take a Big Hit from Jio & Demonetisation
Jio 4G with 50 Million Subscribers offering High Speed Mobile Broadband never ever offered by lethargic A-Vo-Id Operators Lobby is under severe criticism by consumers for overcharging on Data Plans and not responding to Jio’s offerings.

The Demonetisation impact on data revenues which are more discretionary for a consumer is likely to see a larger impact. Currency demonetisation is impacting smartphone sales as well. Dealer checks indicate a 50-70% fall in over-the-counter smartphone sales. Operators will focus on driving data adoption among the existing 80m smartphone users who don’t yet use 3G/4G.

The demonetisation drive and the resultant fall in smartphone sales are likely to have some impact on Reliance Jio’s entry strategy as well. Extension of ‘free’ promotions by Reliance Jio would impact incumbents in 4QFY17. We await announcements by Reliance Jio on 3 December when the 90-day period for its initial free Welcome Offer ends.

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