JioPhone: One Device Disrupts Three Major Digital Markets

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The JioPhone will also cut out the traditional cable TV distributors. A mobile-to-TV cable can be used to plug the phone to any television, effectively turning the device into a set top box.

JioPhone: One Device Disrupts Three Major Digital Markets
Reliance Jio has introduced the Jio Phone at an effective price of Rs 0.
(Image: Reliance Jio)
New Delhi: The launch of the JioPhone has effectively disrupted three vital markets in the digital space: the telecom service providers; the cable and DTH service providers and entry-level smartphone makers.

This was reflected in immediate impact on share prices of competitors in all three segments as soon as RIL Chairman Mukesh Ambani unveiled JioPhone at the company’s annual general meeting in Mumbai on Friday.

The cheapest smartphone in India costs about Rs 3,000-4,000. By effectively pricing JioPhone at zero rupee, Jio has targeted 50 crore feature phone users in India, who can’t afford a smartphone. By bundling unlimited data at cheap rates, Jio is tapping the bottom of the pyramid. Indian and foreign makers of affordable smartphones like Micromax, Lava, Karbonn and Oppo are sure to feel the heat.

The JioPhone will also cut out the traditional cable TV distributors. A mobile-to-TV cable can be used to plug the phone to any television, effectively turning the device into a set top box. Most Indian channels are already available on the Jio App. The losers are the traditional cable and DTH companies.

With the announcement of a physical handset to go with the data, the company has taken a major step towards keeping its customers within the Jio ecosystem. The announcement of unlimited data and cheap tariffs has again hurt the traditional players like Bharti Airtel, Vodafone India and Idea Cellular.

While shares of Bharti Airtel fell about 4% after the Jio announcement, Idea Cellular stock was down about 7 per cent. Vodafone is not listed in India.

Friday was the third time in less than a year when a Jio-related announcement caused rivals’ share prices to dip. On September 1, 2016, formal launch of Jio caused the shares of the two companies to dip, wiping out Rs 13,000 crore from their collective market capitalization. On December 1, 2016 the shares of the two companies again took a beating as Ambani extended the freebies in voice and data, erasing Rs 3,000 crore m-cap of the two competitors.

Among DTH and cable operators, Dish TV was down over 8.5 per cent, Sun TV fell over 4.2 per cent, Den Networks declined 2.46 per cent, and Hathway Cable plunged nearly 5 per cent. Recently-listed GTPL Hathway too fell over 2 per cent.

There are no major mobile handset manufacturers listed in India.

Disclosure: is part of Network18 Media & Investment Limited, which is owned by Reliance Industries Limited

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