Reliance Jio Impact on the telecom industry and player

The latest venture Jio by Reliance in the telecom sector is creating a stir amongst both the big and small
network operators while has brought welcome relief for Indian smartphone users.
Reliance Industries and three telecom companies Bharti Airtel, Idea Cellular and Reliance
Communication (RCom) have collectively lost Rs 22,522 crore of market capitalization (m-cap) in
single day after RIL chairman Mukesh Ambani at the 42nd annual general meeting announced the launch
of Reliance Jio offering customers free domestic voice calls and zero national roaming charges.
Bharti Airtel, the largest loser in terms of m-cap, lost Rs 8,455 crore m-cap at Rs 124,199 crore, the BSE
data shows. Idea Cellular lost Rs 3,528 crore at Rs 30,140 crore, and RCom eroded Rs 1,182 crore at Rs
12,333 crore.

Reliance Industries, too, ended 2.7% lower

The company commercially launched its services on 5 September 2016.[5] Within the first month of
commercial operations, Jio announced that it had acquired 16 million subscribers. This is the fastest
ramp-up by any mobile network operator anywhere in the world.[61] Reliance Jio crossed 50 million
subscriber mark in 83 days while Airtel reached the same milestone of notching 50 million subscribers in
12 years, Vodafone and Idea took 13 years each
Features and advantages:
Network coverage: it currently covers over 18000 cities and towns and 2 lakh villages and is
expected to cover 90% of India by March 2017.
Free voice calling is a major game changer in the industry
Low data tariff opens up market to the masses
Introduction of 4G and LTE phones at competitive prices to masses through tie ups with Chinese
manufacturers

Interestingly, Jio's plans are more focused on the mass market than that of incumbents. At Rs 149 the
company is offering 300 MB of data and unlimited local and roaming voice free and access to Jio
entertainment apps. The company does not plan to charge for SMS either. For the higher end
consumer the benefits are much more as Jio is offering data at significantly lower tariffs. However,
the benefit of Rs 50/GB is only available for high end users or data sharks.
Reliance Jio's entry with disruptive offers of free voice calls, roaming and possibly the world's cheapest
data plans will push smaller mobile service providers such as Aircel, Telenor India, Tata TeleservicesBSE
-0.32 % and Reliance Communications to the fringes, if not to exit altogether, analysts say
Jio effect: Telcos pushing secondary verticals for revenue

The Big 3 of Indian telecom - Bharti AirtelBSE -2.67 %, Vodafone India and Idea CellularBSE -1.04 % - are going flat out to
boost revenues from a clutch of secondary business verticals such as enterprise, wired or 'home' broadband, direct-to-home
(DTH) digital TV services, mobile wallets and wholesale global voice and data services to partly offset revenue challenges in

their mainline mobility operations, stung by demonetisation and Reliance Jio Infocomm's continuing freebies.

Airtel- payment banks

Vodafone- mpesa
LYF also known as Reliance LYF, is an Indian mobile handset company headquartered in Mumbai,
Maharashtra, India. It manufactures 4G-enabled VoLTE smartphones. It is a subsidiary of Reliance Retail,
the consumer electronics arm of Reliance Industries Limited. It is operated along with the parent
companys flagship venture, Jio.

According to Counterpoint Research, in May 2016, LYF became the fifth largest smartphone player and
second largest LTE phone supplier in India.
Airtel

Airtel has reduced its 4G/3G data by nearly 80% and for corporate
customers it has reduced the prices by up to 60%.

Under their latest scheme, customers have to pay 1498, post which one will get 1GB for 51.

When compared with the current market rate, users would be saving nearly 30% for 1 GB per month
data and 37% for 2 GB each month.

Vodafone

Vodafone has revised its 3G/4G monthly recharge packs.

Earlier, 650 plan offered 3GB data, but under the revised scheme users will get 5GB at the same
price.

449 3G/4G plan will have 50 per cent more data. Under the revised scheme, data has been increased
from 2GB to 3GB.

The revised 999 3G/4G pack will now offer 10 GB data, offering 54% more benefits.

Idea

Idea was also in the league of slashing data tariffs by up to 67%.

Users will now get 4G/3G data of 5GB for 649.

Users who want 10GB of 4G/3G, then it shall come at a price of 990

Industry scenario

Termed as the biggest consolidation deal in the telecom space of India, Reliance Communications and
Aircel merged their wireless operations on September 14 to give birth to an entity with assets worth Rs
65,000 crore.

RCom and Maxis Communications Berhad (MCB) hold 50 percent each in the merged entity with equal
representation on the board and committees.
The good data abundance and fresh competition
India has always been a country of poor Internet connectivity and data scarcity. Data is prohibitively
expensive for a vast majority of rural India, and even amongst the urban elite who can afford to purchase
4G data packs, connectivity issues prevent one from taking full advantage of the service.
The symptoms of high call rates and data scarcity, both in urban and rural India, are extremely visible.
Users switch off their mobile data to prevent accidental usage or switch it on only after 10 PM when rates
are lower. Owning more than one SIM is the norm as you want to be able to take advantage of the best
offers from different telecom operators. On festival days such as Diwali, on government holidays such as
Independence Day, and on made-up celebratory days such as Friendship Day, Indians rarely send out
SMS-es or use too much data; all rates are hiked in the name of congestion.
Other existing practices are equally off-putting. Airtel and Vodafones per GB rate could equal Jios
current rates, but their rates come into effect only after users pay a monthly/upfront fee of Rs 1200+.
The launch of Jio signals an important shift from scrounging for data and data-scarcity to potentially an
era of data abundance. The most obvious indicator of this are Reliances free voice calls, cheap data
packages (4GB of 4G data for Rs. 499), the elimination of national roaming and its corresponding effect
on competition (which has supposedly resulted in an industry-wide reduction of data rates). Slightly
cheaper rates, however, are only one piece of the puzzle.
Leaving aside the consumer angle for one second, however, this is going to be an absolute bonanza
for Indias Internet companies, many of which have been struggling in the last year as they
restructure and resize. These companies have started hitting initial barriers to unrestricted growth.
Data usage for e-commerce services like Flipkart, streaming services like Gaana and of course
Facebook and Google is going to burst through the roof

Fiber To The Home (FTTH)

The biggest plan of the company is based on its FTTH service, for which it had started working about a
decade ago. Reliance has already laid down fibre optics cables across most of the country.
Smart home

The FTTH is not just about DTH and broadband services. It also plans to move towards Internet of
Things. The company plans to offer devices to create a smart home. These include security systems,
motion sensors, doorbells with camera and speakers, fire detectors, smoke detectors and much more.
Even as Jio said it added 16 million subscribers to its network in September, the incumbents maintained
their steady subscriber growth during the month with Bharti Airtel adding 2.43 million users, Idea
Cellular adding 1.91 million users, and Vodafone India adding 5,25,279 users, according to data provided
by the Cellular Operators Association of India (COAI).
Is the impact overhyped?
These additions are consistent with the subscriber growth numbers in months prior to Jios launch. In six
months preceding roll out of Jios commercial services, Bharti Airtels subscriber growth was in the
range of 0.70 million to 2.55 million, Vodafone Indias growth was in the range of 46,660 to 1.20
million, and Idea Cellulars was in the range of 0.26 million to 0.86 million. In the month of April,
Idea Cellular reported a net subscriber loss of 0.39 million.
Analysts believe that even though Reliance Jio fired an important salvo by providing free services, lack
of clarity on the quality of its services could have prevented customers from trying out the new
entrant. A research report published by Hong Kong-based brokerage firm CLSA said that during
September, Reliance Jios 4G speed averaged at 7.2 mbps, compared with Bharti Airtels 11.5 mbps,
Vodafone Indias 9.1 mbps, and Idea Cellulars 7.6 mbps
Jio is not free:
While you may think Reliance Jio has made the voice calls free, and with such low-cost 4G data plans Jio
is a better deal, Rajan S Mathews, Director General of the industry body Cellular Operators Association
of India (COAI), thinks otherwise. He points out that Reliance Jio is offering its voice calls on its 4G
network, which is primarily used for data. On other networks say Airtel or Vodafone, you will see
network falling back to 3G or 2G when making a voice call whereas use 4G for data. In case of Reliance
Jio, the data and voice call remain on the same network. In other words, you are making data-based calls,
for which Reliance Jio is charging you a sum, even though its significantly low at Rs 50 for 1GB.

The Telecom Regulatory Authority of India recommended a hefty penalty of Rs. 3,050
crore on top three telcos Airtel, Vodafone and Idea, for violating their license
agreement and denial of interconnection to new player Reliance Jio.
However, the tariff war, between the existing operators and Reliance Jio, is expected to take a better shape
once the latters free services end