Reliance Jio Broadband Plans Seen Impacting DTH Firms, Airtel Not So Much
Jio Fiber may leave DTH operators “vulnerable” but works out to be “neutral to slightly negative” for Airtel, says BofAML report.
Reliance Jio Infocomm Ltd.’s bundled broadband services may leave Direct-To-Home companies “most vulnerable”, Bank of America Merill Lynch said in a report Tuesday.
The Jio broadband launch, however, works out to be “neutral to slight negative” for telecom incumbent Bharti Airtel Ltd., the BofAML report added.
The view comes after Reliance Industries Ltd. on Monday revealed its plans for Jio Fiber, which will offer optical fibre-based ultra high-speed broadband internet bundled with HD television viewing at less than one-tenth of global rates.
This makes DTH operators “most vulnerable” as they are unlikely to offer dual services, the BofAML report added. It did not anticipate a direct impact on broadcasters but said that indirect impact on subscription revenue could be felt if DTH/MSOs (multiple-system operator) revenue are affected.
"Long-term impact would be on ad spends if advertisers focus more on advertising on over-the-top services and spend more on producing quality content to compete with Amazon, Netflix, etc.," the BofAML report said.
The report did not rule some pressure on Airtel’s broadband revenue due to Jio Fiber. The impact, however, is likely to be limited as overall fixed broadband penetration remains low (at less than 8 percent) and large greenfield opportunities remain.
Airtel did not respond to an email seeking its views on the report and Jio Fiber launch.
Reliance Jio, with over 340 million mobile subscribers, has become India's largest telecom firm by revenue. It now hopes to pull off the feat in fixed-line broadband services.
Jio Fiber will offer free voice calls for life from landlines, 100 mbps minimum broadband speed at subscriptions from Rs 700/month up to Rs 10,000/month, and a free HD TV for those opting for an annual subscription plan. It has declared that the landline rates for international calling will be the "lowest", and its plans will come bundled with subscriptions to most leading premium OTT applications.
Brokerage HSBC, however, said Reliance Industries seems to be targeting only gradual addition of subscribers for Jio Fiber. "In its wireless offering, it was easier for subscribers to switch operators but given the low penetration of wireline internet in India, RIL will have to attract new subscribers," it said.
Hathway Cable & Datacom Ltd., Den Networks Ltd. and GTPL Hathway Ltd.—owned or investee companies of Reliance Industries—also offer home broadband at Rs 350-400 per month but offering lower speeds of 50 mbps, whereas Jio Fiber is promising a minimum speed of 100 mbps at a minimum rate of Rs 700 per month.
"We expect the adoption of this offering to be gradual with a long-term view of 4-5 years," the HSBC report said.
Compared to wireless, where prices were at a discount to prevalent rates, Reliance Jio Fiber consumers will have to pay more for new technologies. "On Cable TV, RIL has opened a platform for collaboration with local cable operators rather than announcing any disruptive pricing," the brokerage report said.