Our discussion with channel partners reveals that Jio has also offered much higher commission rates of over 6% on pre-paid recharge vouchers versus industry average of sub-3%. While we find the tariffs quite attractive for data users, high commission rates should provide an added push for high membership of Jio Prime and allow Jio to start with a high chargeable subscriber base.

These plans again underscore that Jio is playing the capacity game. Given its huge capacity advantage, we believe incumbents may find it difficult to match this offer without impacting user experience on their networks. While one
may find Jio’s Rs 149/month plan as Arpu dilutive, Jio is possibly using this to entice users into building habits of higher data and video usage as it offers its Jio apps free along with this. At the same time, some high data users may dislike the daily data limit of 1GB and could upgrade to higher Arpu plan providing an offsetting positive for Arpus. Most importantly, these attractive plans may even attract 2G/3G smartphone users and even home broadband users to become Jio Prime members by buying Jio’s MiFi device.