IGI Logo

Anti-climax: Launch of Jiophone Next delayed

Launch pushed towards the Diwali season

RIL on 10th Sep’21 announced that Jiophone Next, which was planned to be launched on 10th Sep’21 (on Ganesh Chaturthi) is now pushed to the Diwali festive season. Given the ongoing global chipset shortage, our channel checks suggest that availability of the phone could be delayed. However, we expected there would be some insight provided about the phone and that it would start accepting bookings, so to that extent it is a bit of a dampener. The launch during the Diwali festive season, which is less than two months away, could be challenging given that the chipset shortage is expected to last longer for another 15-18 months. Our view is also shared by several global research and advisory firms.

Specifications and pricing not yet known

RJio has already begun testing the device, which will have Google Assistant and a smart camera, with a limited set of users. It is yet to provide any details about the specifications or pricing of Jiophone Next due to uncertain market conditions. As per media reports, the device is expected to be priced at INR3-3.5k and is expected to feature a 5.5-inch display, a Snapdragon 215 SoC processor, a 13-megapixel primary lens, up to 3GB of RAM and 32GB of onboard storage, and will run on Android 11.

Delay could impact Jio’s subscriber additions; limited risk for Bharti

The re-launch of Jiophone in Mar’21 lifted its active subscriber additions to over 7m, but has again slowed down to 2.4m in Jun’21, given the low response. The launch of Jiophone Next is key to subscriber growth. RIL earlier claimed it is targeting 300m feature phone subscribers through Jiophone Next. Bharti’s low ARPU subscribers (15-20%) could see some dilution. Assuming a 20-30m subscriber loss, i.e. 6-9%, the revenue impact could be 3-5%. VIL is estimated to have a larger pool of low ARPU subscribers, which may be vulnerable to a churn and could therefore see a higher impact.

Valuation – Was this expected?

RIL’s stock in the last few weeks rallied on nearing of the Jiophone Next launch date and possible announcements in the Power sector. Given the chipset shortage, it was expected that deliveries may be hit. With no clarity on specifications, pricing, and timelines of the Jiophone Next launch, it’s near term growth as well as the stock’s performance may see some softening. We expect limited impact of this on Bharti, given the limited launch visibility.

To Read Complete Report & Disclaimer Click Here

For More Motilal Oswal Securities Ltd Disclaimer http://www.motilaloswal.com/MOSLdisclaimer/disclaimer.html SEBI Registration number is INH000000412

Above views are of the author and not of the website kindly read disclaimer