With Reliance Jio unveiling its first monthly tariff plans, all eyes are now on the incumbents — Bharti Airtel, Idea Cellular and Vodafone — to see how they will respond. Industry sources believe that the three operators will unveil a new 199 plan which gives 1 GB of data per day for 28 days to take on the similarly priced Jio pack which gives 1.2 GB per day.
Jio on Friday unveiled its cheapest daily-data pack on Friday at Rs 199, promising 1.2 GB of data per day for four weeks.
It also unveiled one more monthly pack — 299 for 2 GB per day. But this is already taken care of by incumbents’ existing 2GB-per-day pack priced at Rs 348.
“It looks like the 200-rupee price point is here to stay,” said an official with an incumbent operator, who expects all operators to ‘converge’ on the price point.
The key difference between Jio’s 200-rupee pack and that of the others will be the higher data allocation, according to industry sources.
In some ways, by offering 1.2 GB per day instead of 1 GB per day, they suggested, Mukesh Ambani seems to be expecting others to come up with competing offers priced at Rs 199.
“Hence, he is offering 1.2 GB, hoping that the others will stick to 1 GB. This will help Jio maintain its differentiation as most efficient provider and help Ambani keep his word,” said a source.
Ambani had promised at the time of Jio’s launch that it always provide 20% more data in each category of plans compared to incumbents.
The 199 plans — though quite attractive due to their low entry-point, are not the cheapest in the market.
Even the existing plans from the incumbents offer data at prices that are comparable to the newly unveiled plans.
For example, while Jio’s 199 pack prices data at Rs 5.92 per GB, incumbents are offering data at Rs 6.40 per GB under their Rs 448 packs — a difference of only 8%.
In fact, the incumbents’ 448 pack — which gives 1GB per day for 70 days — will be cheaper than their rumored 199 plan. A Rs 199 pack that gives 28 GB per month is pricing data at Rs 7.10 per GB, while the already existing 448 packs from the likes of Airtel and Idea gives data at Rs 6.40 (see chart below).
Despite this, pointed out an industry official, the possibility that one of the incumbents actually matching Jio’s tariff cannot be ruled out, especially if they sense that the Mukesh Ambani company is up against a wall and cannot go any lower.
“if they can offer 1GB per day for 199, they can offer 1.2 GB per day for 199,” he pointed out. “The question is, do they want to set off another round of price cuts, or are they willing to let Jio retain its position as the provider of the cheapest 4G services?”
“My reading is that they won’t challenge Jio again as they don’t have the stomach for further cuts, though they may taunt him using some segmented offers,” he added.