Reliance JioFiber's Tariffs Unlikely to Shake Things up the Way They Did in Wireless Telecom: CRISIL
The wired telecom sector has created significant interest over the past few weeks with the entry of Reliance Jio offering 100Mbps to 1GB speed starting from Rs699 to Rs8499 per month. However, the plans offered by Jio are unlikely to drive a significant churn in the market, says CRISIL.
 
In a research note, the ratings agency says, "The lack of pricing aggression and non-attractive bundled pricing would result in limited disruption in the underpenetrated wired broadband market. Further, higher non-refundable deposit fee of Rs2,500 and additional cost for premium content would also dampen prospects."
 
JioFiber’s base plan starts at 100Mbps for 100 GB data limit (plus 50 GB extra for six months). The base plan of most other wired broadband providers starts at 50Mbps for almost the same amount of data, if not more. 
 
 
While Jio’s pricing per GB is approximately Rs4 for the base plan, other operators are also in a similar range. Government owned BSNL's cost is much lower at Rs2 per GB. Among premium plans, JioFiber’s price per GB is about Rs1.2-Rs1.6, again in line with competitors. 
 
JioFiber has also introduced some differentiated offerings including speeds of 1 Gbps, television set on annual subscription of higher-end plans, and other value-added services such as virtual reality sets, home security, content sharing, and device security. 
 
However, according to CRISIL, these niche services are not the primary hook for customers at present, for ‘smart homes’ are yet to capture public imagination and wallets. Moreover, it says, "current speeds of 50-200Mbps offered easily fulfil the data needs of households. Giga-speeds would find applications mostly in internet of things (IoT) use cases, the uptake of which, we believe, is still some time away."
 
India currently has 18.4 million broadband subscribers as of March 2019 as per the Telecom Regulatory Authority of India (TRAI)’s report. With a mere seven connections per hundred households, India’s wired broadband market is highly underpenetrated. In comparison, developed nations such as the United States, the UK, France, and Japan have 30-50% penetration levels.
 
The broadband subscriber base in India has been expanding at a snail’s pace over past five years due to relatively high tariffs in wired broadband compared with wireless and lack of focus among telcos in the wired broadband space.
 
 
In contrast, India has high television penetration of about 65%, with around 190 million households owning cable or direct-to-home (DTH) connections. 
 
Of this, about 167 million households are without wired broadband connections (assuming a household with wired broadband will also own television). These households could have been a ready target market had broadband services been bundled with TV subscription at competitive rates, CRISIL feels.
 
It says, "With the new entrant’s pricing giving no indication of bundling TV cable services, this market would largely remain untapped for now, narrowing the possibility of a significant uptake in broadband penetration. However, the acquisition of Hathway and Den networks gives JioFiber access to 14 million cable TV homes to push its broadband offerings."
 
While there would be no major churn in broadband segment, the ratings agency sees the average revenue per user declining marginally over the next few months as other players try to match JioFiber's pricing to protect their market share. 
 
"We believe consolidation in the sector is also some time away. Further, emerging developments in terms of pricing in the television distribution space will remain a monitorable. So intense attrition is unlikely in the road ahead," CRISIL concluded.
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    COMMENTS

    Ramesh Poapt

    2 weeks ago

    yes, new Jio is NOT as cheap as old one!
    No wonders expected from new JIO.
    It is soft Price increase by Jio, wrongly knowing that
    customer will stick to Jio. Monetizing goodwill?!

    High Court Asks IL&FS SPVs to Continue Running Gurgaon Rapid Metro till 17th September
    In a relief to commuters, the Punjab and Haryana High Court has asked Rapid Metro Rail Gurgaon Ltd (RMGL) and Rapid Metrorail Gurgaon South Ltd (RMSGL), the two special purpose vehicles (SPVs) of scam-hit Infrastructure Leasing & Financial Services (IL&FS) to continue to operate and manage the Rapid Metro Rail on both lines till 17 September 2019. However, the cost will end up being borne by the Haryana Urban Development Authority (HUDA). 
     
    A bench comprising Justices Rakesh Kumar Jain and Arun Kumar Tyagi said, "Till the next date of hearing 17th September, the respondent shall operate and manage the Rapid Metro Rail at Gurgaon (now Gurugram) on both the lines but subject to reimbursement of the insurance and operation and maintenance cost by the petitioners in this period." The court will further hearing into the matter on 17th September.
     
    The High Court decision is crucial in connection with the operational continuity of the Gurgaon Metro, the country's first fully privately built rapid rail system. Further, IL&FS, which built it is now facing bankruptcy proceedings before the NCLAT, thus putting the Gurgaon Rapid Metro service at risk of closure.
     
    The HC order came after the expiry of 90-day termination notice served by RMGL and RMGSL, the two SPVs floated by IL&FS for the rail project. The notice was served on HUDA on 7th June. Gurgaon Metro is a crucial public utility carrying nearly 60,000 passengers every day and it is commonly referred as 'Millennium City's daily commute lifeline.
     
    Last week, HUDA had moved the High Court challenging the validity of termination notice. The development authority had sought courts directions in connection with the continuity of public utility by these two SPVs operating the metro link.
     
    The High Court observed that the dispute between the parties may be resolved by negotiation for which they both would require some time and, therefore, the hearing of this case was deferred to 17th September. The order of stay granted last week is also extended till midnight of 17th September.
     
    Chetan Mittal, counsel for Haryana Mass Rapid Transport Corp Ltd (HMRTCL) told the court that Justice DK Jain, appointed by National Company Law Appellate Tribunal (NCLAT) to oversee the processes, had given the nod to transfer assets, handing over the possession and to negotiate for operation and maintenance.
     
    This is pursuant to the NCLAT order of 8 August 2019 where - RMGL and RMGSL - being red entities were required to seek prior approval from Justice (retd) Jain, former Supreme Court judge, mandated to oversee the IL&FS resolution process, before selling, transferring, encumbering, alienating, dealing with or creating any third party right, title or interest on any movable or immovable assets.
     
    Justice Jain, in the order, has also said that HUDA shall be free to engage the services of RMGL at mutually discussed charges to run the Metro Link till such time appropriate or alternate arrangements are made to run the same, a report from IANS says.
     
    Mr Mittal told the HC that the contract between RMGSL and HMRTCL stood terminated from both the sides. "Some disputes relating to transfer of assets would take some time. But they are ready to go ahead, whatever be the operational costs as its continuation is in larger public interest," he said.
     
    The project, he said, has earned Rs4 crore profit during three-month period. The total earnings were about Rs18 crore, while the cost of operations were around Rs14 crore. Besides they were in touch with Delhi Metro Rail Project and other agencies.
     
    In the last hearing, Mr Mittal had said the HMRTCL and the respondent had entered into an agreement, whereby the concessionaire was required to develop, operate and maintain metro link from Delhi Metro Sikandarpur Station on MG Road to Sector 56, Gurugram.
     
    As pointed out by Moneylife, the spanking world-class Rapid Metro, which became operational in Gurgaon (now Gurugram) in 2013, had certainly added lustre to the modern township built by DLF. But the project was based entirely on fraudulent and fabricated ridership claims, to get government sanctions, right of way for land use and other benefits. The metro project was conceived by DLF, the realty giant, and mid-wifed by the scandal-hit IL&FS. (Read: IL&FS Scam: Gurgaon’s Rapid Metro Was Based on Entirely Fraudulent Numbers)
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    IL&FS Receives Binding Bids worth Rs13,000 Crore for Its Domestic Road Assets
    Scam-hit Infrastructure Leasing & Financial Services (IL&FS) has received binding financial offers worth about Rs13,000 crore for its 10 domestic road assets. These bids were opened on 9 September 2019.
     
    "In addition to the above, IL&FS group entities continue to hold rights to receive claims with gross value exceeding Rs1,900 crore, filed with various concession authorities in respect of these assets. The combined value of bids and these claims will help address the cumulative financial debt of Rs17,700 crore, as of October 2018, in these assets," the company says in a release.
     
    The 10 road assets that received binding bids include:
     
    One Green Asset – Jharkhand Infrastructure Implementation Co Ltd (JIICL);
     
    Five Amber Assets - Jharkhand Road Projects Implementation Co Ltd (JRPICL), Moradabad Bareily Expressway Ltd (MBEL), Chenani Nashri Tunnelway Ltd (CNTL), Hazaribagh Ranchi Expressway Ltd (HREL), Jorabat Shillong Expressway Ltd (JSEL). Both JRPICL and MBEL are in the process of being re-classified from Amber to Green on the basis of the restructuring proposals agreed with its lenders.
     
    Four Red Assets - Baleshwar Kharagppur Expressway Ltd (BKEL), Pune Sholapur Road Development Co Ltd (PSRDCL), Road Infrastructure Development Co of Rajasthan Ltd (RIDCOR), Sikar Bikaner Highway Ltd (SBHL).
     
    The IL&FS board is evaluating these offers in consultation with its advisors. 
     
    According to the release, this development represents yet another important milestone in the overall resolution process for IL&FS group being undertaken by the new board headed by banker Uday Kotak.
     
    "The new board has initiated monetization of number of other assets - including education, waste management, technology, real estate and key international assets.
     
    Binding financial bids for the assets are expected soon," the release added.
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