Daily launching of smartphones is flooding the Indian market, which could lead to a high density of smartphone users throughout the country. A report published by Bank of America Merrill Lynch (BofA ML) reveals that by 2018 the Indian smartphone network will be crowded up to nine crores of 4G subscribers with 18 crore of 4G handsets.
The assumption depends on Reliance Jio Infocomm. It the telco delays the launch of its 4G services then Bharti Airtel, Vodafone and Idea Cellular will gain the respective subscribers from this growth.
Sachin Salgaonkar, Karan Parmanandka, and Simon Dong-je Woo, BoFA ML research analysts said in their report, “We expect 4G smartphone base to jump from 5 million in FY 2015 to 180 million (18 crore) by FY 2018, leading to 4G subscribers accelerating from almost zero in FY 2016 to 90 million (9 crore) by FY 2018.”
Taking the current prices of 2G and 3G data charges into consideration, the analysts expect that there would be a marginal difference between the 3G and 4G data rates. Also, the current 2G subscribers might directly switch to 4G tariffs for an abrupt change in surfing speed and bandwidth.
Describing the scenario, the analysts further said, “With all the big 3 telcos expected to have rolled out 4G selectively in key urban areas before March, 2016 we expect their top-end (high usage) consumers to migrate to 4G. This, in our view, will make it difficult for Jio to poach these subscribers as the company would need to focus on offering a differentiated service.”
As per the latest updates, Reliance JIo hasn’t changed its position to announce its high-speed data services at the end of this year, as earlier committed by chairman Mukesh Ambani. Moreover, the 4G plans by the company are expected to be very cheap as compared to the top of the line players, Airtel, Vodafone, and Idea.
Also, with the lower pricing strategy, it is estimated that Reliance Jio will be the market leader in terms of 4G subscriber base from 2017 onwards till 2025 followed by big three telcos.
“The company (Jio) is looking for 4G phones to be priced between Rs 4,000-25,000. Jio would need a 5 band phone which works on 900, 2100 bands along with 800, 1800 and 2300 for seamless connectivity,” the report added.