Reliance Jio Rejects Spectrum And AGR Moratorium; JioPhone Price Not Competitive Enough To Concern Rivals: Reports

Reliance Jio Infocomm introduced the JioPhone Next on 29 October that would cost Rs 6,499 when it is released. Meanwhile, other reports revealed that the company has refused the Central government’s embargo on the spectrum and adjusted gross revenue (AGR) payments.

The newly launched JioPhone Next 4G smartphone will be available starting with Diwali and will be offered with an EMI option starting at Rs 1,999.

It was developed by Reliance in collaboration with Google and Qualcomm. This is the first smartphone to come with Google-developed Pragati OS.

The features of JioPhone Next include a 5.45-inch HD+ display, 13MP rear camera, 8MP front camera and 3500mAh battery that charges via a micro USB port. Additionally, Qualcomm Snapdragon 215 chip is used in the smartphone.

However, according to analysts, the pricing is greater than what is currently available in the market, thus it won't be able to cause the disruption it was designed to cause.

According to experts, Airtel and Vodafone Idea may not need to be concerned about Jio's proposal because they can simply offset it with their bundled handset packages, reported Economic Times.

Neil Shah, research analyst and partner at Counterpoint Research, said: “The impact will be slightly less than expected as the pricing is not disruptive. Jio may have to sweeten the deal to attract 2G feature phones. To attract Rs 100 ARPU users, it will not be that compelling an offering.”

Additionally, he said: “Cheaper smartphones are available. Rival telcos can double down by partnering with those handset brands. There will be reprieve for Airtel, Vodafone Idea.”

However, Shah stated that the JioPhone Next will grow the total Rs 5,000 segment but will not be able to take into the market share of any other smartphone manufacturer.

According to Ashwinder Sethi, a principal at Analysys Mason, the handset may not be able to attract low ARPU 2G consumers due to the pricing, but it will still be able to attract customers paying Rs 100-150 per month.

Sethi added that “...from a medium to longer-term perspective, it will be beneficial for the telecom industry as the ARPU of these customers will increase and they will become addressable customers of smartphone manufacturers when they refresh their handsets in 2-3 year timeframe”.

However, it is believed that JioPhone Next will face competition from particularly 3 major rivals — Samsung, Xiaomi and Realme. It is because considering features and price, these companies have better options, such as Samsung Galaxy M02 (starting price Rs 7,999), Xiaomi Redmi 9A (Rs 6,799) and Realme C11 (Rs 6,699).

Telco Relief Package

Meanwhile, the government's moratorium on the spectrum and adjusted gross revenue (AGR) payments has been rejected by Jio, making it the only operator to do so. Jio's reluctance comes as rivals Bharti Airtel and Vodafone Idea have agreed to both types of moratoriums.

Jio's reaction follows the telecom relief package that included a four-year suspension on AGR and spectrum payments, much lower BGs, and the opportunity to convert statutory dues to government equity.

Reliance Jio has paid the Department of Telecommunications (DoT) Rs 10,792 crore to settle all outstanding debts related to the spectrum purchased in the 2016 auctions. But it has not paid up all dues for spectrum purchased in the 2014 and 2015 auctions, which total around Rs 15,000-Rs 16,000 crore, including interest.

Analysts believe that a moratorium for the cash-rich firm would be counterproductive because, unlike its competitors, it is not under pressure to grow its 4G capacity or invest in next-generation technology, reported ET.

However, as per the report, brokerage firm Nomura calculated that opting for the spectrum embargo will save Mukesh Ambani's telco Rs 4,300 crore in yearly cash flow.