汇丰银行-印度电信业-indian telecom：understanding the jio 4g feature phone impact-20170721-hsbc

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1、21July2017IndianTelecomEQUITIESWIRELESSTELECOMUnderstandingtheJio4GfeaturephoneimpactIndiaJiofeaturephoneisfree,butupfrontcashoutlayisINR1500RajivSharma*AnalystHandsetfinancingschemesmayseeasharpupsurgeHSBCSecuritiesandCapitalMarkets(India)PrivateLimitedrajivsharma@hsbc.co.in

2、+912222681239MaintainReduceonIdeaCellularwithTPofINR58DarpanThakkar*Analyst4GentrantJio(notlisted)announcedthatits4GfeaturephonewillbeavailableforHSBCSecuritiesandCapitalMarkets(India)PrivateLimiteddarpan.thakkar@hsbc.co.infree,howeversubscribersmayneedtopayupfrontINR1500intheform

3、ofathreeyear+912261640695refundabledeposit,implyingthefeaturephoneispricedatanadjustedNPVofINR350(assuming8%interestlostona3-yeardepositofINR1500).Themonthlyoutlayto*Employedbyanon-USaffiliateofHSBCSecurities(USA)Inc,andisnotregistered/qualifiedpursuanttoFINRAregulationssubscribers

4、forthefreevoiceandunlimiteddataserviceswillbeINR153,whichis8%higherthanIdeaCellular’s4QblendedARPUand14%higherthanitsFY18eblendedARPU,suggestingthatfromanoverallcashoutlayandmonthlyrecurringchargesperspective,the4Gfeaturephonedoesnotseemtobeverydisruptive.Giventhecombinedupfrontcas

5、houtlayofaboutINR1650,thismaynotcatertotheentire500mmarket,inourview,andmayaddressonly25-30%,astheaveragesellingpriceinthefeaturephonesegmentisINR700andthecashoutlayfortheJiophoneismorethan2xthat.Withthislaunch,Jioseemstobefilteringoutpoorqualitysubscribersandattemptingtoattractonl

6、yqualitysubscribers.UnderstandingJio’snewfeaturephoneoffer.TheinitialdespotofINR1500,inourview,isahandsetsubsidywhichisbeingrecoveredupfrontmoreasinsurance,incasethesubscriberdiscontinuesservice.Asperouranalysis,80%ofthehandsetsubsidyisbeingrecoveredviamonthlyARPUsandtherestinthefo

7、rmofinterestearnedontheupfrontdeposit.TheeffectiveARPUforJiostandsatINR78,fromasubscriberrechargingeverymonthfor36monthspostadjustmentforrecoveryofhandsetsubsidies.Thatsaid,ifthesamesubscriberwastomakec19minsperdayofoff-netoutgoingcalls,JiomakesnoARPU,assumingthecurrentterminationr

8、ateof14paisa(seefigures1an