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RJio’s new home broadband plan, priced at Rs198/month, is competitive with Airtel’s lowest plan (Rs499/ month), which may help the company further improve its market share dominance (24% in Dec-22). Although the new plan is limited to 10 Mbps speed, it is sufficient for streaming HD content (up to 1080p). As per our analysis, the new plan is particularly appealing to customers who purchase their DTH/Cable, OTT, and Broadband plans separately, because it can help them save a substantial portion of their billing amount. RJio intends to acquire market dominance in the Rs214bn home broadband market, as well as to make inroads into the Rs157bn DTH market and the Rs181bn cable market, with the new Rs199/month package (our estimate). With this plan, RJio has followed a strategy similar to its wireless strategy to acquire the market. Jio’s recent plans also indicate increasing competitive intensity in the sector, with the company trying to gain market share in the pre-paid, post-paid, and broadband markets. We believe Bharti Airtel will respond to this plan as well.

Affordable broadband plan (Rs198/month) with upgrade options: RJio has introduced JioFiber Broadband plan, which starts at Rs198 and offers unlimited data with up to 10 Mbps of speed. The connection offers users a speed upgrade for 1/2/7 days, increasing the speed to 30 Mbps or 100 Mbps for an additional payment of Rs21,152. The plan also provides the option to upgrade to Set-Top Box (STB) for Rs100 or Rs200 per month, which includes (i) 400 to 550 live TV channels and (ii) 6 to 14 over-the-top (OTT) apps. The plan is available for a minimum of five months and costs Rs1,490 (Rs990 for five months and Rs500 for

New plan to increase market share: RJio’s new plan, starting at Rs198/month, is more affordable than Airtel’s existing lowest plan of Rs499/month. Our analysis shows that even for other existing plans costing the same amount, RJio offers higher speed or access to additional OTT apps compared with Airtel, thus maintaining its edge over Airtel’s plans. As a result, JioFiber is gaining subscribers at a faster rate than Airtel (0.8mn per quarter for JioFiber vs. 0.4mn per quarter for Airtel). We believe RJio’s introduction of the Rs198 home broadband plan is aimed at (i) attracting new customers from rivals, thus maintaining a high addition rate (~0.8mn per quarter), (ii) restricting Airtel’s increasing subscriber addition rate in home broadband (in partnership with LCOs), (iii) disrupting Airtel’s DTH business by providing access to live TV channels and OTT apps on extra payment, and (iv) gaining subscribers from BSNL whose subscriber number has been stable at ~4mn since Q3FY22. Although the new plan is throttled at 10 Mbps speed, it is sufficient for streaming HD content (up to 1080p). Only UHD requires 15-20 Mbps speed; hence, the new plan will be insufficient for UHD video, unless upgraded to a higher speed plan.

DTH/Cable operators to be hit: We believe the newly introduced plans are particularly suitable for customers who purchase their DTH/Cable, OTT, and Broadband plans separately, as users tend to spend Rs800-1,400 per month (broad range based on varying internet speeds, number of OTT plans, and channels purchased). In our view, customers can save up to 40% of their billing amount by purchasing these plans. The new plans are affordably planned and users may switch from their Pay TV plans. With the implementation of NTO 3.0 from February 1, 2023, cable and DTH customers are likely to further feel a pinch in their pockets, accelerating a possible switch to the new plan

Outlook: Jio has been on the move in recent weeks, with its new post-paid plans, cricket plans, and reasonably priced broadband plans. This indicates rising competitive intensity in the sector, with Jio attempting to gain market share in the pre-paid, post-paid, and broadband markets. Airtel is trying to compete with Jio’s offers by introducing new post-paid plans to protect its FTTH turf and prevent any sharp decline in its DTH segment, which has been one of its weaker segments. Going ahead, tariff hike quantum and timeline along with 5G capex intensity will be important monitorables for the telecom sector

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