Reliance Jio's 2G-free India drive likely to hit Vodafone Idea hard

About 60% of Vodafone Idea's customer base is in the 2G space

Mukesh Ambani’s plan to make India ‘2G-mukt’ will hit the incumbent operators hard, especially Vodafone Idea given its large base of 2G subscribers. After racking up 100 million users for its 4G-enabled feature phones (JioPhone), Reliance Jio in partnership with Google is eyeing the entry-level smartphone segment. Jio is planning to win over 350 million 2G feature phone users by launching a smartphone ‘at a fraction of the current cost’.

Experts believe that Jio, which dominates the mobile broadband space (4G) with 58 per cent market share, could capture the incumbents’ market share in the feature phone segment with its new offering. While Bharti Airtel has 135 million 2G users, 47 per cent of its total subscriber base of 283 million, Vodafone Idea has 174 million 2G users, about 60 per cent of its total subscriber base of 291 million at the end of the March quarter.

Mayuresh Joshi, head of equity research at William O’Neil India, says: “Vodafone Idea has the highest 2G subscriber base among the top three operators. This coupled with a weak financial situation and inability to commit large capex investment will make it the most susceptible to subscriber loss. The ongoing churn for Vodafone could accelerate if Jio is able to launch a smartphone at a substantially lower cost in partnership with Google.”