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Reliance Jio Needs 80 Million Users In 2-3 Years To Break Even: Analysts

Reliance Jio will need to garner 75-80 million subscribers, who spend an average of Rs. 180 a month on mobile bills, over the next 2-3 years to hit break- even, analysts said on Friday.

Reliance Industries Ltd's telecom arm has announced free lifetime voice calls and roaming services for its users along with data charges at about one-tenth of the prevailing rates.

The company is targeting 100 million subscribers in shortest possible time, RIL Chairman Mukesh Ambani said on Thursday while unveiling the 4G service.

While market watchers described the move as a "knockout punch", they also feel that incumbents (like Bharti Airtel, Vodafone and Idea Cellular) are likely to formulate a new pricing and marketing strategy over the next few days to protect market share.

"We believe R-Jio would need 75-80 million subscribers with an average revenue per

user (ARPU) of Rs. 180 for EBITDA break-even over the next 2-3 years -- execution and customer care is the key," IDFC Securities said in a note.

It added that growth for RJio would primarily be driven by market share shift from fringe players and modest gain from incumbents, who have a relatively weak data footprint.

Goldman Sachs expects RJio to hit EBIDTA break-even by FY 2019-20 with 75 million subscribers.

Another brokerage, Motilal Oswal said a subscriber base of 75 million with an ARPU of Rs.244 would help RJio generate revenues of about Rs. 18,400 crore, but remain loss-making at EBITDA level (Rs. 1,580 crore).