Jio Fiber tariff plans\n\n\n\nReliance Jio, India's biggest telecom operator by volumes, has set a short-term target of signing on 3.5 cr (35 mln) subscribers for its fiber internet service by the end of 2020, said a stock analyst, quoting company sources.\n\n\n\n"Their immediate target is to sign up 20 mln [2 cr] homes in the next 12-15 months," said the Mumbai-based analyst, who is not authorized to speak to the media and prefers to remain anonymous.\n\n\n\nThe analyst, quoting company sources, said the remaining 15 mln subscribers are expected to come from the small and medium enterprises.\n\n\n\nThese numbers are far more ambitious than most observers expected, given the current pricing of the GigaFiber services.\n\n\n\nThe company unveiled its FTTH plans in September, but largely disappointed consumers who were expecting it to replicate its rock-bottom pricing strategy -- which caused widespread disruption in the wireless market -- in the wired segment as well.\n\n\n\nAgainst the expected starting price of around Rs 500 per month, Jio Fiber's cheapest plan was unveiled at Rs 825 per month, including taxes. The Rs 825 plan, if contracted for one year, will yield 200 GB of data per month. \n\n\n\nJio Fiber's pricing is on the higher side when compared to what competitors like Spectra are offering in metropolitan cities like Gurgaon, Bangalore and Mumbai.\n\n\n\nSpectra, for example, offers 750 GB of data -- with carry forward -- at a speed of 250 Mbps at Rs 943 per month in Bangalore under a 15-month lock-in.\n\n\n\nGiven the pricing situation in metropolitan cities, most of the demand for Jio Fiber will have to come from tier-2 cities and district headquarters, as the metro consumer already has compelling FTTH plans to choose from.\n\n\n\nHowever, what remains to be seen is if consumers in smaller towns and cities will be willing to shell out Rs 825-1,000 per month on their broadband connection.\n\n\n\nThe mismatch between Jio's pricing and its ambitious goals of penetration has even led to some speculation that the announced tariffs may be something of a red herring, and the real prices may be much lower.\n\n\n\nThe stock analyst did not give any more details about how the Mukesh Ambani-led company plans to achieve the rather ambitious target of 20 mln fiber customers by the end of 2020.\n\n\n\nFor comparison, Bharti Airtel, which has been in the wired broadband sector for more than two decades and is present in around 90 cities, still has a modest subscriber base of only 2.4 million. In other words, Jio plans to add eight times as many home broadband subscribers in the next 12-15 months as Airtel was able to in over two decades.\n\n\n\nThe additional target of 15 million commercial subscribers indicates that the company will focus as much of small businesses -- mostly shops and small offices -- as on the residential market.\n\n\n\nThis is partly owing to the fact that it is much easier to connect commercial establishments to a wired network than homes, as commercial establishments tend to be located close together.\n\n\n\nThe targets are also likely to put further pressure on BSNL, the state-owned wired network provider. BSNL has around 10 million wired subscribers, out of which around half are estimated to be on DSL connections and the remaining are estimated to be purely voice, landline connections.\n\n\n\nInterestingly, Jio officials also guided for a decline in capital expenditure -- or the money spent on expanding its network -- this year compared to the last.\n\n\n\nThe analyst said Jio expects to spend about Rs 50 bln (Rs 5,000 cr) per quarter (three months) going forward to meet its capital needs, which is primarily related to network expansion, including the construction of last-mile connectivity for its fiber business. Jio had spent Rs 8,500 on capex in the three months from April to June this year.