Reliance Jio is targeting to launch its budget smartphone in collaboration with Google during Diwali as it looks to halt the drop in subscriber additions in the second quarter.

Jio lost 11 million subscribers in Q2 ratcheting up pressure on the telecom player which has been looking to dominate the field. Although ARPU (average revenue per user) rose by 4 per cent to

Rs 144, several brokerages expect things to improve only if the company raises tariff — as Airtel and Vodafone already have.

The churn at the bottom of the subscriber pyramid is worrisome and it isn’t clear where these users are heading.

ICICI Direct believes that Jio will be able to arrest the subscriber decline once it launches its JioPhone. The JioPhone Next is powered by Android Pragati OS .

Markets are speculating the 2GB RAM powered phone would be priced around Rs 3,500, attractive enough to encourage migration from 2G mobile phones.

Analysts at Jefferies said Jio’s performance during the second quarter was little to cheer about as revenues, earnings before interest, taxes, depreciation and amortisation (EBITDA) and profits missed estimates even as the subscriber decline of 11 million was the key disappointment

Nomura said the operators will shift focus from market share gains to ensuring adequate returns for future network rollouts. With a high subscriber base, ARPU increase is likely to be the main growth driver, thus making tariff hikes inevitable.

JM Financial said a part of the subscriber loss could have been due to the impact of users moving out after their three-year lock-in period.

According to JP Morgan, Jio’s performance depends on tariff hikes, while Emkay said the operator suffered a churn in the low end. Motilal Oswal pointed to Jio’s lack of tariff action.