Although Reliance Jio is expected to launch its 4G services at cheaper prices, the telecom arm of Mukesh Ambani's Reliance Industries could face problems in gaining subscribers due to low average revenue per user (ARPU) and acceptance of 4G/VoLTE handsets, according to a global brokerage firm.
Reliance Jio has delayed the launch of its 4G services to next fiscal. Earlier, it had planned to roll out the services by December this year.
"...new entrant Reliance Jio will still face the daunting task of convincing/bundling/subsidising 4G users to adopt new handsets when 95 per cent of subscribers are still prepaid with an average Arpu (average revenue per user) of Rs 160 per month," CLSA said in a report.
"We maintain that switching to 4G handsets in this low-ARPU prepaid market and wide consumer acceptance of 4G/VoLTE will remain the key hurdles for the new entrant," the report added.
VoLTE is a new version of Internet-based call technology Voice over Internet Protocol (VoIP), which is being offered by Skype, WhatsApp and others.
"VoLTE is yet to be launched even in China and even after Reliance Jio will launch commercially, users will need 4G VoLTE phones and interconnecting to incumbent voice networks will be key...While the number of 4G-enabled handsets being offered in the market has jumped, the availability of VoLTE enabled handsets remains low," CLSA said.
While some analysts expect increased competition between domestic telcos after the launch of Reliance Jio services, CLSA sees Bharti Airtel, India's biggest telecom operator, as the major beneficiary of mobile data boom in the country due to its "highest quantum of spectrum".
Sunil Mittal, chairman of Bharti Airtel, has recently said that the company would spend $3.5 billion in the current fiscal, nearly $750 million more than it invests usually, to boost its 4G plans.
"We maintain Bharti Airtel as the best play on India's mobile data boom and accelerating data network rollouts by top operators will drive Bharti Infratel's (infrastructure arm of Bharti Airtel) growth," PTI quoted CLSA, as saying.