| Log in
Other Photo Credit: Reuters

Six ways in which Reliance Jio may have changed India’s telecom landscape

03 November, 2016

It has been exactly two months since Reliance Industries Ltd (RIL) chairman Mukesh Ambani announced the launch of the company’s 4G enabled telecom network Jio. Although two months is hardly any time to make any serious impact in a telecom market, especially one as competitive as India, Jio seems to have made a dent, with even rivals like Airtel acknowledging that the newest kid on the block is here to stay. Here is how Jio has impacted the Indian telecom market, till now, and what may be in store for the future.

1. Jio has grown at a scorching pace: A month after its launch, RIL claimed that the network had 16 million subscribers, which, it said was an all time record. Analysts believe, that by the end of the preview offer (the offer ends on 31 December, but there are reports that it may be extended till 31 March 2017), the network, which has been adding 1-1.2 million subscribers a day, will likely have 25 million 4G customers. This compares with Airtel, which has 35 million 3G and 4G users, and Vodafone and Idea, which together have 25 million. Mumbai-based financial consultancy Edelweiss said in a report released in October that in the next three years Jio could have 100 million subscribers. This, if it happens, will be more than 2.5 times the number of subscribers Jio will require to breakeven. In a September report, brokerage Religare had said that to breakeven at the EBITDA level, the network will need to have at least 40 million subscribers.

2. Jio has sent demand for VoLTE enabled handsets soaring: As a Techcircle report noted on 1 November, demand for Voice over LTE (VoLTE) phones in the country had surged since Jio was launched in September. VoLTE technology allows voice calls to be transmitted as data, while a 4G network is being used. Citing market research firm Counterpoint Technology, the report said that 80% of LTE compatible smartphones shipped during the July-September quarter (Q3) were VoLTE enabled, as compared to 63% in Q2 and 30% in Q1. It further said that 90% of all LTE (4G) enabled phones to be shipped into India by the first half of 2017 will use VoLTE technology. According to Counterpoint, Samsung, Lyf, Lenovo and Xiaomi are among the leading brands in the VoLTE category. This effectively means that going forward, VoLTE will become the default basic minimum smartphone technology in the country.       

3. Jio has set off a fierce mobile tariff war in the country: At its launch, Ambani said that Jio will offer the lowest data tariffs in the country, and will also let users make voice calls for free not just on its network but also from Jio to other networks. And, it gave its customers a free four-month trial period. Anticipating this, just a couple of days before Jio announced its data plans, Airtel slashed its prepaid tariffs by 80%, and the other operators followed suit. A closer analysis showed that although Jio’s offering was certainly the cheapest, it wasn’t cheaper by much. Yet, it had disrupted the data market unlike any other operator had done in the past.

4. Jio is hurting the balance sheets of other telecom companies:  Airtel saw a 4.9% decline in its Q2 profit following the operator slashing data tariffs. Even with a decline in profit, Airtel bettered analysts’ expectations, with a 24% increase in data revenue, but its rival Idea wasn’t so lucky and actually saw its data revenue decline by more than 19%. Some unconfirmed news reports say that although the existing operators do not want to make their voice calls totally free, they could make calls made over the VoLTE networks they will roll out in future free. This could hurt their margins further.

5. Jio is forcing the other players to join forces: The telecom industry has begun consolidating. Little less than a fortnight after Jio’s launch, Ambani’s younger brother Anil Ambani announced his company Reliance Communications’ (RCom) merger with rival Aircel. The long-awaited move led to the creation of a Rs 65,000 crore entity, which is also reportedly in talks with Russia’s Sistema, which already holds 10% in RCom. This, even as Jio itself shares RCom’s network, fibre, spectrum, and towers. Analysts say that as Jio spreads its wings and Airtel, Vodafone, and Idea fight to hold on to their respective market shares, India’s telecom industry could see a further round of consolidation involving smaller players who may find it hard to survive.

6. Jio could impact the online content market in India: Cheap and fast data means only one thing: people will gorge on more and more audio-visual content online. Jio has launched at a time when video streaming service Netflix is struggling to get a foothold into the price conscious Indian market, where rivals like Hotstar are already jostling for space. This, even as Amazon is waiting in the wings to launch its video streaming service in India. The Jio suite offers more than 300 live streaming TV channels and hundreds of music albums and movies. Although this will be available free till the end of 2017, Jio hopes to cash in on this after that. This will force other incumbents to up their game in the online video streaming space, and we could see significantly more original online content, and significantly higher ad spends, especially around tournaments like the Indian Premier League.

Like this report? Sign up for our daily newsletter to get our top reports.


View Comments
All you want to know about Reliance Jio’s spat with Bharti Airtel and others

All you want to know about Reliance Jio’s spat with Bharti Airtel and others

Aman Malik 1 year ago
Ever since billionaire Mukesh Ambani-led Reliance Industries Ltd (RIL) launched...
Reliance Jio to launch 4G services by Dec; RIL readies B2B marketplace, m-payments & more

Reliance Jio to launch 4G services by Dec; RIL readies B2B marketplace, m-payments & more

TEAM VCC 2 years ago
Reliance Jio, the wireless telephony and data services unit of Mukesh Ambani...
Seven things you want to know about Jio in the times of demonetisation

Seven things you want to know about Jio in the times of demonetisation

Aman Malik 1 year ago
On Thursday, Reliance Industries Ltd chief Mukesh Ambani announced that new...
1 Comment
Pulakesh Roy . 7 months ago

My jio number 8169179526 has not been worked since December”2016. Matter was bring to your notice through customer care in several times and reported personally to your Service centre in San pada (above Railway Station ). As adviced I had been replaced my Sim long back. But still it is not working and voice response is “”” Your call rodh kar diya gaya and contact customer 199″”. W hich number is not at all available. Please look into this matter and inform me accordingly in my mail : roy_pulakesh@yahoo.co.in

Six ways in which Reliance Jio may have changed India’s telecom landscape

Powered by WordPress.com VIP