Reliance Jio will add 40 million users, $2B revenue in next fiscal, Morgan Stanley predicts
Reliance Jio will add 40 million users, $2B revenue in next fiscal, Morgan Stanley predictsReuters

With Reliance publicly testing its Jio 4G network services, there is a lot of hope building around its commercial launch. While consumers are eagerly waiting to see what the telecom operator has in store for them, leading merchant banker Morgan Stanley predicted that Reliance Jio is likely to gain 40 million users and $2 billion in revenues in the next fiscal.

Read: List of all eligible smartphones for Reliance Jio unlimited 4G data so far

For years, the telecom industry has remained unchallenged and carriers had the advantage of setting their own price rules. But Reliance Jio's entry in the market has disrupted the flow, forcing current players to meet the competition requirements. The Jio Preview Offer (JPO) has gone so popular that people are lining up at Reliance stores to get new Jio SIM cards.

The attraction is predictable, as Jio is making an irresistible offer of unlimited high-speed 4G data, voice and SMS free for 90 days. The telecom operator is spoiling consumers' habit with this offer and setting new challenges for its rivals in the market.

At this current pace, Reliance Jio's growth is unstoppable. By giving free services for three months, Reliance is not losing money, but simply setting up a base for multiplying its revenue once the service is commercially launched. Going by Morgan Stanley's predictions, Jio would be making average revenue of Rs. 300 per user. But the company has also spent a lot on its service, nearly $21 billion, to date.

We expect Reliance Jio to generate more than $2 billion revenues in 2017-18 with revenue market shares of 2 per cent in voice and 19 per cent in data, leading to a 6 per cent overall revenue market share," Morgan Stanley Research said in its latest report, IANS reported. "We believe Reliance Jio would add more than 40 million subs in 2017-18, at an average revenue per user of Rs 300. We expect it to turn free cash flow positive in 2019-20."

Reliance Jio has already acquired a significant market share despite the pending commercial launch. Its service is now available on several 4G LTE smartphones and is not just limited to its LYF series. The pricing of the Jio internet and voice call plans is still a mystery, which is expected to be revealed at the time of the commercial launch. Even though Jio is offering free services to 1.5 million subscribers right now, the pricing will play an important role for it to grab a lion's share of the telecom market.