Reliance Jio has three products lined up for launch in the market - JioPhone, Jio Smartphones and JioBook (low-cost laptop). All the low-cost products are a swing at the competitors showcasing Jio's aggressive strategy. The move will help Jio regain subscriber momentum, according to a report from JM Financial. JM Financial said in a report that Jio's subscriber momentum could be “bottoming out”; given its aggressive strategy to acquire significant quantities of the capacity spectrum to regain subscriber momentum via its new Jio Phone offers and the impending launch of the low-cost smartphones.
“We believe that Jio's significant focus on subscriber addition is because it could enable it to cross-sell and up-sell digital opportunities to its subscriber base in the long term. However, markets may await for more traction on digital services,” JM Financial also added.
What does that mean?
The quote from JM Financial simply means that Reliance Jio aims to acquire a large consumer base with low price products. All the products that Jio has launched or plans to launch mostly cater to the masses. Further, the company will bring its 5G smartphones, a JioBook laptop, both under 15k, this year at its AGM. If that is true, the products will likely come out in August or September this year. Apart from that, Reliance Jio is also hosting online gaming e-sports events to get new subscribers on its board.
Notably, Jio added an average of 4.7 million customers in 2019-2020. In 2021, the number has dropped to 2.3 million in 2020-21. With JioPhone and Smartphones, the company will be able to increase its subscribers in 2021-2022. Further, with spectrum constraints now behind, traction in new Jiophone plans are key to revive subscriber addition momentum, the report said.
The financial report mostly suggested the key points to explain the future of RIL stock. “We re-iterate BUY (TP of INR 2,500) as RIL is entering a strong FCF generation phase with major Capex completed and expectation of strong 17-18% EPS CAGR over the next 3-5 years led by Digital and Retail businesses,” the report said.