We believe unlimited voice calls offering from Reliance Jio is a master-stroke from Mukesh Ambani. It is a great customer-acquisition tool, as it uses Jio?s large network capacity. It would spur adoption of 4G smartphones, in many cases directly from 2G to 4G.
A-Vo-Id Operators would have to respond by offering more value to their 4G handset users this again would tend to spur adoption of 4G handset over 3G, by voice-heavy 2G subs. Over time, at a certain scale of 4G users (and when PoI/connectivity issues are sorted out), this would help showcase the superiority of Jio?s VoLTE for on-net calling.
It would put pressure on ARPUs of high-end subs of A-Vo-Id Operators, while potentially driving an ARPU-uplift for low-to-medium voice-centric subs, wishing to migrate to Jio after purchasing a new 4G/VoLTE handset
We do not see incumbents offering unlimited calling at such low ARPU, given their less efficient 2G and 3G networks, on which voice would be carried for 4G subs through Circuit Switched Fall Back (CSFB). In our view, incumbents should be able to retain most of their high-end customers after taking some ARPU hit and by offering more minutes.
