Jiophone sales are rising fast and could start affecting the growth rates of rival telecom companies once the churn effect of fleeing Aircel subscribers gets over, analysts from financial services firm Credit Suisse said.
Analysts Sunil Tirumala and Viral Shah said trends indicated that the Jiophone is contributing about 7 mln out of the 8-9 mln new subscribers added by 4G operator Reliance Jio every month.
“It is difficult to gauge at this point whether Jio is eating into other’s share or adding to the pie (i.e. customers buying Jiophone as their secondary device),” the duo wrote in a note.
“Given the mood in the incumbent camp on this topic (i.e. not much alarm), the latter could be the more likely situation currently. Exit of smaller players (most recently Aircel) could be cushioning the blow for incumbents – but that is a cushion that may not last for long,” they added.
Jio has managed to spur the offtake of the KaiOS-based phone after it introduced special tariff packages for its users.
Those using the Jiophone, for example, get nearly a month’s worth of free calls for Rs 49, while those using regular handsets have to pay thrice that amount.
“..these trends do indicate that this is a product that has passed the early adopter stage and is getting well accepted – and that should be a reason for worry for the incumbents,” they said.
“Sooner than later, it could start eating into installed subscriber base of incumbents. Going forward, potential release of KaiOS version of Whatsapp could be an added catalyst for sales of this device.”
After initial supply-chain issues, said the analysts, the wrinkles and bottlenecks seem to have been ironed out.
Meanwhile, Counterpoint Research said the Jiophone account for nearly 36% of all non-smartphone sales.
“Recent media reports suggest JioPhone having a 36% share of the feature phone market for Jan-Mar 2018 quarter – on an expanded market base (feature phone sales doubled year on year). This implies JioPhone sales of ~21mn for the quarter – or roughly 7mn per month,” the report noted.
The “supply of the feature phone had improved significantly towards end of 2017, and by the time the Rs49 plan got launched, there were smooth sales without any waiting periods at most stores we spoke to around the country. Indeed, the stores also spoke of continuous supplies every week to replenish stock,” they added.