New Delhi: Shares in Reliance Industries Ltd (RIL) have raced to a seven-year high, boosted by its announcement to soon start charging for data services offered by its Jio 4G mobile services that have notched up 100 million customers in just 170 days since launch.
RIL Chairman Mukesh Ambani on Tuesday announced that Jio Infocomm Ltd, a wholly owned subsidiary of RIL and one of its biggest bets entailing an investment of around Rs 200,000 lakh crore, will start charging customers for its 4G data services starting April 1. He also said that Jio will offer 20% more data than its competitors on their best-selling plans.
As investors cheered the announcement, analysts welcomed the return of greater certainty to a sector that had been disrupted by Jio's announcement last September to offer free voices calls and data.
Credit Suisse said Jio's decision to charge customers was the “best of positives for the sector” although it said it saw no let down in the company’s competitive aggression. Jio’s rivals Bharti Airtel and Idea Cellular, whose shares had slipped on Tuesday in the wake of Ambani’s announcement, rose 1.12% and 0.14%.
AK Prabhakar, head of research at IDBI Capital Markets Services Ltd was quoted by Firstpost as saying that Jio’s decision to start charging customers has led to clarity in the sector which was missing for some time.
“There were earlier concerns that RIL may extend its free services to customers for 4-6 months to acquire customers. However, the decision to end will mean cash will flow to the company," he said.
Ambani also announced the launch of a special plan called the Jio Prime Membership Programme, available only for existing customers and those who sign up before March 31. Jio prime will be open from March 1-31 for a one-time fee of Rs 99 for a year. Jio Prime members will get access to its cut price data tariffs and will also be eligible for the full bouquet of the network’s media services.
Jio has added more than 100 million customers since its launch in September. Ambani said that the mark was reached in just 170 days of operation. “Data is the Oxygen of Digital Life and Jio promises to provide world-class data at prices affordable to all Indians,” he said.
Jio currently has twice the number of 4G base stations than all other mobile services put together and by the end of 2017 the Jio network will be present in nearly all the cities, towns and villages of India covering 99% of India’s population, Ambani said.
(Disclosure: News18.com is part of Network18 Media & Investment Limited which is owned by Reliance Industries Limited that also owns Reliance Jio)