Jio FTTH Launch: Impact Analysis & View on DTH, MSOs, Broadcasters, Advertisers, Cinema Halls / Multiplexes

Jio FTTH Launch: Impact Analysis & View on DTH, MSOs, Broadcasters, Advertisers, Cinema Halls / Multiplexes

Impact on DTH / MSOs

Launch of Jio FTTH will have a negative impact on DTH and MSO growth prospects in medium term due to better content partnerships (Eros, balaji, Jio Cinema, Jio TV) which the latter cannot offer. Further, the pricing has been kept in line with incumbents like Hathway (INR 700 ARPU) which is unlike Jio mobile where in the plans were at a steep discount vs incumbents. Airtel too has plans to launch a hybrid set top box which can offer IPTV services; but we believe absence of content partnerships won’t help scalability for them. We believe the TV distributor market will get heavily consolidated just as the telco market was post launch of Jio.

Impact on India penetration

Launch of Jio’s mobile few years ago, had a big positive impact on the mobile Internet penetration which has breached 90% in line with global averages; the broadband penetration until now in India has been 10%, launch of Jio FTTH will lead to surge in the number of users which will enable this penetration to multiply over medium term in line with emerging nations (China’s FTTH penetration is almost 70%).

Impact on Television Broadcasters

TV penetration in india is almost 68% today, however the smart tv penetration is much lower as consumers have recently started the transition towards smart tv due to cheaper prices. We believe Jio’s plans to provide free smart tv’s in the Forever plan will be a game changer for increased smart tv penetration. This will further push content consumption online from traditional mediums. Most of the large broadcasting groups today already have existing deals with Jio to showcase their channels on Jio TV, however the viewership is blocked on TV screens and is limited to mobile viewing only in case this moves to TV screens, broadcasters will have a negative impact on their own viewership on TV and their OTT platforms.

Impact on Ad. Spends

It is believed that Jio mobile had spent large sums of money during its launch. Jio FTTH will lead to surge In ad spends over the next 12-15 months which may have some minor positive impact on ad growth prospects which has been muted now across the TV segment.

Impact on Cinemas / Multiplexes

Jio has also announced plans to offer movie on a first day first show basis, this we believe won’t have a big negative impact for the multiplexes as release of a movie in cinema is very important in order to get deals on digital and satellite. Further, there are about 400 films released every year across genres and hence release of a few films directly on Jio won’t impact footfall. Cinema going is considered a family outing in India and we don’t see large budget films going for direct release on Jio, it will be limited to smaller films going directly on digital, as the economics of a big film don’t work for the same.

Overall, we believe execution of the FTTH launch remains to be a key factor for its success. Unlike the mobile, where customers switched to Jio at a rapid pace due to extremely cheaper prices vs incumbents , we may not see the transition being so rapid as FTTH continues to face last mile challenges (LCO support and customer willingness to switch). However, there will be a slow and steady movement towards Jio FTTH based on customer service and feedbacks.

KTA’s of the AGM – Media & Entertainment

Jio Fiber services will start on 5 September. The base package priced at ₹700 and offers 100Mbps speed vs US average data speeds of 90mbps.

Service has a capped top speed of 100Mbps instead of 1Gbps speeds promised during its unveiling last year.

The top-of-the-line package is priced around ₹10,000 per month with access to broadband, Jio HomeTV and Jio’s IoT.

Landline services with all of its Fiber packages. Voice calling to any Indian operator would be free. “ISD calling tariffs would be 1/5th to 1/10th of industry rates.

Jio Forever Plans that will give users an HD or 4k LED television and 4k set-top box for free.

As per the company, premium Jio Fiber customers can watch movies at home the same day they are released in theaters. This service will be launched in the middle of 2020.

Jio-Microsoft Alliance-Jio to set up a network of large world-class datacenters across India powered by Microsoft’s Azure cloud platform.

Over the next 12 months, Reliance Jio will install one of the largest blockchain networks in the world in India, with tens of thousands of nodes operational on day one.

Complete tariff information would be available on 5 September.
Mixed reality (MR) startup Tesseract. MR has many use cases including virtual shopping, education and movies.

As guided by Management, The core and aggregation layers of our converge network are already 5G ready. Our wireless hardware is already 4G+ and can be upgraded to 5G.

Jio Fiber’s Preview service generated interest from 15 million people in 1,600 towns. Ambani said the services plans to reach more than 20 mn residences in 15 MN businesses in 1,600 towns. 5 lakh homes are on trial plans and each of these are using more than 100GB of data.

Eyeing enterprise customers including 2.4mn small and medium businesses (SMBs) and large businesses with the service.

(Karan Taurani @Elara Capital)

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