Why Reliance Jio’s new 90GB-for-799 plan is bad news for Bharti Airtel, Idea Cellular

Reliance Jio, the country’s largest internet service provider, will unveil a new tariff plan for iPhone 8 users that will offer 90 GB of 4G data for Rs 799 over a 28-day period, media reports said.

That works out to Rs 8.88 per GB, which is almost half the rate valid for a comparable non-iPhone plan. Under its regular tariff, Jio offers 60 GB for Rs 999, which works out to Rs 16.66 per GB.

Both plans have unlimited calls and SMS thrown in, and have no daily data limits but the 799 plan has a daily data limit of 3 GB.


The new plan could create some concern for established players like Bharti Airtel and Vodafone as it indicates that the new entrant is willing to cut its prices even below the tariffs it announced six months ago.

In April, Jio announced a set of tariffs that were seen as revolutionary at the time, offering 1 GB per day and unlimited calls and messaging for 28 days at Rs 309.

According to the tariff announced at the time, the Rs 999 scheme was the cheapest plan without a daily cap, and priced 1 GB of 4G data at Rs 16.66.

That distinction now belongs to the 799 plan, and by a large margin.


This is also the first new tariff plan that the company has announced since July, and is supposed to incorporate its reaction to popular response to a price increase effected by the company in July.

On July 12, Jio had increased the effective price of its data and voice plans by about 50%, testing out market response.

It has to double its existing effective price to reach its goal of getting an average revenue of Rs 300 per month from its subscribers.

At present, most of its users are on the 399 plan, which offers unlimited calls and 1 GB of data per day. This generates only about Rs 140 per month for the company.

On the other hand, if the new entrant finds lower demand for data as it increases prices, it will hurt its revenue, and in turn its profitability. In such a case, it is expected to go slow on the price escalation, which is bad news for rivals.

Jio’s rivals like Bharti Airtel and Idea Cellular are hoping that the company continues to raise prices, enabling them to withdraw the promotional offers they have had to roll out to retain subscribers.

Jio has a strategy of maximizing revenue and profit, instead of looking at per-GB data prices, unlike rivals who try to focus on price-per-GB instead of revenue or profit.

Fierce competition from the newcomer has squeezed margins and dented bottomlines at Idea Cellular, Bharti Airtel, Reliance Communications and Vodafone.