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    Here’s what brokerages say after Reliance Jio unleashes new postpaid tariff war

    Synopsis

    According to ICICIdirect, the new postpaid plans by Reliance Jio creates a new layer of tariff-based competition in the segment that was so far unchallenged and lucrative.

    Jio unleashes new tariff war, ramps up offerings in postpaid segment to target high paying Airtel, Vi users

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    Brokerages retained their bullish stance on Bharti Airtel even after billionaire Mukesh Ambani-led Reliance Jio on Tuesday unveiled postpaid plans, bundling up to 500 GB of data and subscription to Netflix, Amazon Prime and Disney + Hotstar.

    Shares of Bharti Airtel, however, traded 5.78 per cent lower at Rs 443.80 at around 11:30 am (IST), while Vodafone Idea traded 5.56 per cent down at Rs 9.68 at around the same time. On the other hand, the benchmark BSE Sensex was up 0.62 per cent at 37,966.

    JioPostPaid Plus for mobile customers will have a monthly tariff varying from Rs 399 to Rs 1,499 with different benefits, the company said in a statement.

    According to ICICIdirect, the move creates a new layer of tariff-based competition in the segment that was so far unchallenged and lucrative.

    “Both Airtel, Vodafone Idea (VIL) are exposed to this risk of churn, the pressure on VIL will be more. The theme of prepaid tariff hike in near term also remains questionable. We await incumbent’s move before incorporating any impact in our financials and valuations. We retain ‘Buy’ on Airtel with an unchanged target price of Rs 700 given comfortable leverage and superior customer quality. However, we maintain ‘Sell’ on VIL with an unchanged target price of Rs 6 per share, given the difficult path ahead to assure survival.”

    Reliance Jio added that the main objective of the newly-launched JioPostpaid Plus service is to provide superior services across connectivity, entertainment, and experience.

    “There can't be a more opportune time to introduce JioPostpaid Plus. After having earned the trust of close to 400 million satisfied customers in the prepaid smartphone category, we want to extend our customer obsession to the postpaid category,” Akash Ambani, Director, Jio, said in a statement.

    Axis Capital sees this as an attempt by Reliance Jio to add high-Arpu customers and shift some of its customers from prepaid to postpaid.

    “There will be no impact on incumbents as only 5 per cent and 8 per cent of Bharti Airtel and VIL customers are on postpaid plans. Most postpaid are enterprise customers who are sticky and incumbents also have comparable plans which can match Jio with some tweaking. Incumbents provide additional features like handset protection. We see it as a positive for the sector as it will attract a new generation of OTT aficionado subscribers which will expand the postpaid market,” Axis said while maintaining a positive stance on Airtel and Reliance Industries.
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    2 Comments on this Story

    Srikanth Jagannatham29 days ago
    It's quality is cheap sh*t, it's another RCOM in the making. They don't have spectrum and crying now before PMO
    R Vaidyanadhan30 days ago
    Jio was not not floated with good intentions, it appears Ambanis diverted the funds of the Rcom and declared RCom a "divala"company. Money manipulation?
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