Facebook deal gives Jio a good leverage in WhatsApp: Experts

Kolkata: Facebook’s acquisition of a 9.99% stake in the parent company of Reliance Jio will enable the Mukesh Ambani-led telco to leverage the US social media giant’s messaging channel WhatsApp to bolster its digital offerings and veer customers away from rivals Bharti Airtel and Vodafone Idea (VIL), analysts said.

The deal allows Jio to leverage WhatsApp as a powerful messaging channel to promote the telco’s digital offerings directly to the customers of its competitors, Sanford C Bernstein said.

Calling the deal “a negative development for Bharti and VIL,” the brokerage said Jio can be expected to use the WhatsApp relationship to convert Bharti and VIL customers to use its network. Currently, Jio leads the market with some 388 million users, with Vodafone Idea at over 300 million and Bharti Airtel at over 280 million subscribers.

Brokerage Jefferies doesn’t expect the Facebook deal to change telecom market leader Jio’s tariff discipline as it remains competitive versus peers, though it expects further tariff increases in 2020 to be reduced.This, it says, is because Jio’s tariffs are “at 7-20% discount” to that of its peers and its JioPhone offerings should also help the company stay competitive and continue boosting customer additions.

“Aggression suits a new entrant, not a market leader… if Jio cuts tariffs, it hurts itself the most,” the brokerage said.

Analysts said the deal is also strategic for Facebook, which counts India as its largest market with 328 million monthly users, while WhatsApp has 400 million users, the most in the world.

Source Article

Lois C. Ferrara

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