While the rest of the world heads towards the super-fast internet speeds of 5G or even 6G, rural India is still stuck in the 2G era. According to the International Data Corporation, there are over 250 million feature phone users in India still using 2G phones, primarily for voice calls. The digital disempowerment and inequity in India for feature phone users have recently deteriorated, with some telecom companies raising the minimum prices for services. However, Reliance Jio has embarked on a journey to improve connectivity for these users by launching the new Jio Bharat 4G phone.
It began with Reliance Jio, known for its disruptive market strategies, entering into a deal with Google in 2020 to develop affordable entry-level 4G and 5G handsets, with the goal of making India “2G-mukt”, or free of 2G technology. Under this partnership, Google promised to optimise its Android operating system and the Play Store for smartphones to be offered by Jio in the market.
Jio Bharat 4G vision
Reliance Jio has positioned its 4G smartphone as a crucial element in its vision of achieving a “2G-mukt Bharat.” It plans to expand its customer base by introducing low-cost 4G/5G devices. The teleco currently has 426 million 4G customers and plans to further increase these to 500 million. The new Reliance Jio-Google smartphones will likely help the brand in achieving this goal.
Speaking at the launch, Akash Ambani, chairman, Reliance Jio, said, “There are still 250 million mobile phone users in India who remain ‘trapped’ in the 2G era, unable to tap into the basic features of the internet, even as the world stands at the cusp of a 5G revolution. Six years ago, when Jio was launched, we made it clear that Jio will leave no stone unturned to democratise internet and pass the benefits of technology to every Indian. Technology will no longer remain a privilege for a select few. The new Jio Bharat phone is s step in that direction. It is at the centre of innovation, and it continues to demonstrate our focus on bringing disproportionate and true value for different segments of users with meaningful, real-life use cases. At Jio, we have and will continue to take bold steps to eradicate this digital divide and welcome every Indian to join this movement. We care for every citizen of our nation, and we will go the extra mile to ensure that every single person reaps the benefits of the digital society that our great nation is turning into.”
Reliance Jio’s new 4G phone aims to bridge the mobile connectivity gap between rural and urban India by providing a cheaper alternative for non-smartphone consumers to upgrade from 2G to 4G mobile networks. The first beta trial of the phone began in July 2023 across 6,500 tehsils. The device will intensify competition in the entry-level market, which is currently dominated by Redmi and Realme.
Specifications of the device
Reliance Jio’s budget-friendly 4G phone, named “Jio Bharat”, is priced at Rs 999 and is available for purchase from July 7, 2023. The Jio Bharat phone is aimed primarily at people who cannot afford expensive smartphones but require access to basic functions. Along with the phone, Reliance Jio has introduced the Jio Bharat Mobile Plan, a budget-friendly mobile plan, which is priced at Rs 123 for a monthly subscription that includes unlimited voice calls and 14 GB of data. Additionally, annual plans are offered, with an annual package priced at Rs 1,234 with 168 GB of data (0.5 GB per day) as well as unlimited calling.
The Jio Bharat Phone is available in two models: the Jio Bharat V2 and the Jio Bharat K1 Karbonn. Reliance Jio built the Jio Bharat V2, the Jio Bharat K1 Karbonn was developed by Jio in collaboration with Karbonn, the smartphone company.
The devices’ interface contains three pre-installed Jio apps for users: JioPay, a digital payment software based on UPI; and JioCinema and JioSaavn, for access to Jio’s own on-demand video and music streaming services. The devices also feature a radio and a torch, making them handy in rural locations. Additionally, they have a 3.5 mm headphone connection and come with expandable storage via microSD card with a maximum storage capacity of 128 GB.
Impact of the launch
The announcement of Jio Bharat 4G was disruptive, but it will take time for Jio to establish a substantial market share in the 2G space, which targets over 250 million users. This is due to the fact that a significant 2G user base is still retained by two other private players – Bharti Airtel (Airtel) and Vodafone Idea Limited (Vi).
In March 2023, Jio demonstrated its focus towards the premium segment of subscribers with the launch of a postpaid plan, and this latest move demonstrates its determination to cater to the lower end of the subscriber spectrum. Over 70 per cent of feature phones in the market are priced above Rs 1,000, making Jio Bharat a tempting offer.
According to brokerages tracking the sector, the launch of the budget-friendly internet-enabled Jio Bharat phones would enable Jio in gaining market share at the lower end of the market. This, in turn, suggests a reduced likelihood of price hikes in the short term.
A report by Emkay Global Financial Services Limited estimates that if there were no supply chain or product performance issues, Jio Bharat would have been able to migrate over 100 million members. At the end of Q4 financial year 2023, Vi and Airtel had 103 million and 111 million 2G subscribers respectively. The potential migration of 40 per cent of these 2G users to Jio Bharat could impact Vi’s mobile revenue by 11 per cent and Airtel’s by 8 per cent, and mobile earnings before interest, taxes, depreciation, and amortisation (EBITDA) by 19 per cent (Vi) and 11 per cent (Airtel). Further, it will have a 6 per cent impact on Airtel’s consolidated EBITDA.
Further, industry analysts believe that the strategic timing of the Jio Bharat 4G’s launch alongside its competitive rate plans will assist Reliance Jio in capturing nearly 40 per cent of the existing 250 million 2G subscribers who are currently with Airtel and Vi. While Airtel would still be able to mitigate the impact, it is anticipated that Vi’s 2G user base could be affected the most.
Another research by Macquarie Global Services Private Limited indicates that Jio presently has the largest subscriber market share in Kolkata (42 per cent), Mumbai (35 per cent) and Delhi (34 per cent), outperforming Vi, Airtel and Bharat Sanchar Nigam Limited (BSNL). The data also showed that in rural regions of Bihar, Jammu & Kashmir and Himachal Pradesh, Airtel holds a larger market share than Jio. As a result, Jio plans on capturing this market through the Jio Bharat 4G phone.
However, the Jio Bharat phone could encounter challenges considering the buying cycle for feature phones. Given the phone’s Rs 999 price tag, it may initially appeal only to those looking to buy a new feature phone and may not immediately disrupt Airtel’s and Vi’s 2G base.
The future awaits 5G
Going forward, India is poised to become a significant 5G market by 2026 and will control the majority of 5G net additions. This dominance will emerge as 5G net additions in China begin to mature and slow down.
A report from Counterpoint Research showed that 100 million 5G smartphones were sold in India in May 2023, surpassing 4G smartphone shipments for the first time. It marked a significant milestone for the country’s mobile industry. The report projects that by the end of 2023, over 140 million 5G handsets will have been bought.
Accordingly, Jio’s 5G smartphone plans are next in line. Jio’s 5G connection has already been deployed in several cities, and the company plans to launch its 5G smartphone soon to keep up with the world’s fast-paced technology. However, the company must exercise caution that these devices actually fulfil the promise of delivering high-end features at affordable prices.
