Reliance Jio has introduced its new Jio Prime membership, a strategic move offering subscribers protection against potential future tariff hikes. This initiative, priced at a one-time fee of Rs 300, is seen as a direct response to Bharti Airtel's recent efforts in tariff rationalization, according to analysis by Nomura.
Jio's Strategy: Retain and Attract
The Jio Prime membership aims primarily to retain Jio's existing subscriber base by guaranteeing current plan prices until September 5, 2027. This price lock applies to plans like the Rs 299 per month offering, unless a broader, industry-wide tariff increase occurs.
Nomura's report highlights that the Jio Prime strategy also targets Bharti Airtel's entry-level subscribers. Many of these users might be unwilling to pay an additional Rs 50 per month for Airtel's next cheapest daily unlimited plan following the discontinuation of its Rs 299 per month option. Furthermore, the Jio Prime membership includes a Rs 300 voucher designed to incentivize users to port friends or family from other networks, specifically eyeing Airtel's Rs 299/month customer base.
"Even if only 10 per cent of Airtel’s customers from the discontinued plans move to Jio, there will be net subscriber gain of 69 lakh (1.3 per cent of Jio’s current subscriber base), in our view," Nomura stated.
Vodafone Idea's Tightrope Walk
In contrast to Jio's aggressive stance, Vodafone Idea (Vi) appears to be in a "wait-and-watch" mode. Nomura suggests Vi is likely assessing the impact of Airtel's plan rationalization on its own subscriber numbers over the coming months. If Airtel successfully upgrades its Rs 299 subscriber base without significant churn, Vi might follow with a similar rationalization to boost its Average Revenue Per User (ARPU).
However, should Airtel experience high subscriber churn, Vodafone Idea would likely need to respond with tariff protection, mirroring Jio Prime, to capture a share of the migrating Airtel customers. Given Vi's precarious financial position, the company faces a difficult balancing act: it cannot afford to lose subscribers but urgently needs to increase its ARPU.
Analyst Outlook and Target Prices
Nomura projects a robust 14 percent growth in consolidated EBITDA CAGR for both Bharti Airtel and Reliance Jio between FY26-29. This forecast is underpinned by an anticipated 15 percent tariff hike expected in the December quarter. Vodafone Idea, starting from a lower base and with improving operational metrics, is projected to see a slightly higher 15 percent EBITDA CAGR.
Bharti Airtel remains Nomura's top pick among the telecom stocks under its coverage, with a target price set at Rs 2,360. For Vodafone Idea, the brokerage has set a target price of Rs 13.50.