In the Indian Telecom industry, Data and Voice markets differ in elasticity. Voice is demand constrained with fixed time availability, and service differentiation is difficult. For data, demand will be driven by screen size, resolution, and speeds. Users are also likely to spend more time on data. By end-2017, Jio will have capacity to offer 4G LTE data of 4 Bn GB/day and Voice of 14 Bn min/day
India has 124 Mn 4G Smartphones of which 100 Mn are on Jio’s network. Although many are dual SIM phones, only one SIM can be used for data at a time. Hence, effectively, Jio has 80% share of data SIM usage. Currently > 60% of iPhone VoLTE enabled users that have single SIM are on Jio network, which is a big surprise to us. Additionally, 4G VoLTE enabled feature phone is becoming a reality backed by Jio.
Going forward, the metric to focus on will be ARPU per user Vs the current ARPU per SIM. There are 1.13bn SIMs, according to TRAI. According to Jio’s estimate, there are 263m smartphones and 496m feature phones. SIM per user is 1.19 for smartphone users and 1.28 for feature-phone users. Jio sees ARPU per SIM is a misnomer while assessing ability to pay. For Jio, effective ARPU per real user is Rs 330 for smartphone and Rs 172 for feature phone while ARPU per SIM is Rs277 / Rs134 for smartphone / feature-phone users.
In 2009, the industry had 392m subs at Rs 179 ARPU (which is Rs500 today, adjusted for nominal per capita income). Hence, there is a reason to believe that ~400m people have the capacity to spend Rs 500 per month. Jio thinks that in its 1GB / day Prime plan at Rs303 for 28 days, effective yield will be Rs 30/GB based on Analytics of its 100 Mn users. Thus, to begin with, Jio arrived at figure of Rs 303 / Month / User under the Prime Plan and gradually aim to expand the same to Rs 500 / User / Month with bouquet of offerings [Jio TV, Movies, Games, Magazines, etc] to justify the pricing.