CERTIFICATE

This is to certify that the research titled ‘Reliance Jio’s

impact on India’s telecom sector - a case study’ is a study
carried out by Ms. Jaishree Jaiswal, student of Banaras
Hindu University, Department of Journalism and Mass
communication, in partial fulfillment of the requirements
for the course named: Masters in Corporate
Communication Management under the guidance of Dr.
Neha Pandey during the academic session 2016-2018.

Place: Varanasi

Date: __________

Signature of the Mentor

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 Acknowledgement

I am grateful for the support and dedicated assistance of my University

professor: Dr. Neha Pandey. It was a sense of enormous pride to complete this
study under her guidance. Thanks for tutoring us in a manner that has led us
understand the subject of study in a more practical manner.

I would also like to acknowledge my worthy teachers, Professor Anurag Dave

and Professor Sisir basu for their valuable knowledge and encouragement that
has led to a learning experience throughout this whole journey.

My Sincere thanks to my college mates, staff members, batch mates and

friends for their constant support and mentorship when required.

At home, I want to acknowledge and thank my parents who were always a great
source of inspiration. Thanks for all the love, support and encouragement.

Jaishree Jaiswal
16414CCM008

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 Content
List of Tables & figures

Abstract

Chapter Title Page no.

1 Introduction
1.1 Background of the study 7-8

1.2 Jio’s Product and Services 9-13

1.3 Jio Controversy 14

1.4 Purpose of the study: Statement of the 15-16

problem, Aim and Objectives
2 Review of Literature
2.1 Report by Michael Safi, Delhi (Mon 5 Sep 17
2016 17.28 BST – The guardian)
2.2 Analysis of Jio’ strategy: Business standard, 18-20
Surajeet Das Gupta
2.3 Research on Jio and its competitors by India 21
Infoline News Service
2.4 Study by Aveek Datta Forbes India Staff 22-24

2.5 Study on Jio disrupt by Scholar of JNU 25-28

2.6 Study on Jio by Press trust of India 29-30

3 Methodology 31-33

3.1 Research design, Sample and Sampling unit 31

and data collection method
3.2 Description of Variables 32-32

3.3 Time schedule 33

3.4 Budget 33

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4 Findings
4.1 Identifying how the entry of Reliance Jio has 34-37
affected other service providers like Airtel,
Vodafone and Idea.

4.2 Pricing and promotional strategies adopted by 38-45

Reliance Jio to rule over the telecom sector of
India.

4.3 The rise or fall in the revenue of the telecom 45-52

industry over the financial year 2017- 18

4.4 Stating about consumer satisfaction by a 53-57

comparative study of Jio with other brands like:
Airtel, Vodafone and Idea.

4.5 SWOT Analysis 58-59

4.6 Porter’s 5s model 60-61

5. Summary and Conclusion 62-64

6. Suggestions 65

7. Annexure
Figure 1: Press release of Jio
66-68

Figure 2: Jio launch media coverage

Figure 3: Reliance Jio advertisement by its Brand
ambassador
REFERENCE

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 List of Tables and Figures
Serial no. Title Page no.
1 Closing share price of Jio, Idea and Airtel for the 8
year 2016-2017

2 Net sales and net profit of Idea and Airtel after 21

Jio disruption

3 Plan rates of Jio, Airtel, Vodafone and Idea 25

4 Comparison of the market share of 2016 and 29

2017 of all the telecoms

5 Jio price chart 42

6 Pricing strategy of Jio vs. Others 43

7 First newspaper advertisement of Jio featuring 45

PM of India

8 Performance of Jio as per TRAI reports 51

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Abstract

Reliance Jio Infocomm Limited or Jio is an LTE (Long term evolution) mobile
network operator in India. The JIO services were first beta-launched to Jio's
partners and employees on 27 December 2015 on the eve of 83rd birth
anniversary of late Dhirubhai Ambani, founder of Reliance Industries, and later
services were commercially launched on 5th September 2016.

“Jio means to live and to be alive to very opportunity. World’s demand for
digital oxygen, that is data, is growing exponentially. Jio aims to fulfill this
need of Indians. Access to information will now know no barriers,”- Mukesh
Ambani. We are in the technological era. The world of telecommunication has
been changed. Earlier they were send text only, now we can send images,
audio, video and any type of documents by using whatsapp and Facebook
messenger. In Indian population 35% of them are in the age group of below 35.
Two-thirds of India’s 1.3 billion populations are not online, and Jio hopes to
capture 100 million users —nearly half of India’s current smart phone users —
within a year of launch. They are the target customers of Reliance Jio.
1According to sources, Jio - setting a new record - has acquired 1,000
customers per minute (since September 05) and 6, 00,000 per day." Jio
continues to be the fastest growing company in the world and has crossed 50
million subscribers in record 83 days". Airtel reached the same milestone of
notching 50 million subscribers in 12 years, Vodafone and Idea took 13 years
each. In this study we can know how the reliance Jio gets more number of
customers and their business strategy to attract the customers.

1 www.ijemr.net/DOC/ImpactOfRelianceJIOOnTheIndianTelecomIndustry.pdf

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 Chapter – 1
Introduction
There is an ugly spat underway in India’s $50-billion telecommunication
industry. Barely a fortnight after India’s richest man, Mukesh Ambani,
launched his much-awaited 4G service, Reliance Jio; the newcomer is already
embroiled in a war of words with India’s biggest telecom company, Bharti
Airtel. The conflict is over providing points of interconnect. These points help
link networks so consumers can make calls between different operators,
enabling a smooth exchange of traffic. Each company claims the other isn’t
coordinating and has ulterior motives.

The sparring isn’t entirely unexpected. Jio is being touted as an industry

disrupter for its ridiculously low data prices ($0.7 per gigabyte), expansive
infrastructure, and plan to entirely do away with charges for domestic calls. So,
even before it was formally launched, incumbent players were on the edge.

For instance, in August, these telecom providers complained to the Telecom

Regulatory Authority of India (TRAI) that Jio was offering full-fledged services to
customers and calling it trials, even before the services began. Ambani refuted
these allegations. Then, a week before Jio’s launch, Bharti Airtel, Vodafone,
and Idea Cellular—these three control 60% of the market currently—slashed
their prices for data services to keep up with Jio’s anticipated lower rates.

Now, it has degenerated into an unseemly and public squabble between Jio
and Bharti Airtel. Here’s how it all happened, based on media statements from
companies:

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  Sept. 17: In a statement, Airtel said it has received a payment from Jio to
provide extra interconnect points to facilitate the large call volume that
the latter is expecting. According to the interconnectivity agreements,
these points should be provided within 90 days of receiving the payment,
Airtel said, but it “would work towards releasing the points of
interconnect well ahead of the contractual obligation.”
 Sept. 18: In a statement, Jio said no such 90-day clause exists and that
TRAI has “instructed the incumbent operators to urgently provide
requisite interconnection capacities to maintain the quality of service
parameters and not to make this subject to any contingencies or
restrictions.”
 In the same statement, Jio also said that Airtel hadn’t provided enough
interconnect points, as a result of which more than 20 million calls
between the two networks’ subscribers fail daily. It said Airtel is “dilly
dallying” on adequate points to Jio.
 Sept 18: Airtel issued a statement following Jio’s allegations. “…it is Jio
that seems to be dilly-dallying on the issue and not cooperating
deliberately. It appears that the constant rhetoric may be a ploy by Jio to
cover up some technical issues in their own network, which is causing
call failures, by constantly blaming other operators,” the statement said.
 Sept 18: Late on Sunday, Jio replied to Airtel’s allegation. “The
statements from Airtel are misleading and unfortunate in the context of
the severe quality of service issues being faced by the Indian customers.
While there are over two crore call failures every day between the two
networks, there are no incidents of call failures within the Jio

network.”

1.1 Jio disrupt

Telecom firms, especially Airtel, have a reason to be jittery over Jio’s plans.

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The Ambani Company has set a target of getting 100 million customers on
board by December 2016. It’s quite a target considering that Airtel, which
launched in 1995, has some 358 million users after 20 years.

“Bharti and Idea would be impacted by the aggressive signing up of subscribers

by Jio—likely as second SIM—on account of the welcome offer and it can
potentially shift voice/data usage from incumbents,” analysts at ICICI
Securities, a brokerage, said in a Sept. 02 report.

Then there’s Jio’s huge network capacity. In a report on Sept. 14, analysts at
Credit Suisse explained how Jio’s huge network capacity—three times that of
Airtel—will make it a powerhouse when it comes to pricing.

Partnerships

Jio shares spectrum with Reliance Communications. The sharing deal is for
800 MHz band across seven circles other than the 10 circles for which Jio
already owns.

In September 2016, Jio signed a pact with BSNL for intra-circle roaming which
would enable users of the operators to use each other's 4G and 2G spectrum in
national roaming mode.

In February 2017, Jio announced a partnership with Samsung to work on LTE

- Advanced Pro and 5G.

1.2 Products and services

Jio's official slogan

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2Jio Phone

On 21 July 2017, Jio introduced its first affordable 4G feature phone, powered
by KaiOS, named as Jio Phone. The price announced for it is ₹0 with a security
deposit of ₹1500 which can be withdrawn back by the user by returning the Jio
Phone at Jio stores only after three years. This phone was released for beta
users on 15 August 2017 and pre-booking for regular users started on 24
August 2017.

4G broadband

The company launched its 4G broadband services throughout India in

September 2016. It was slated to release in December 2015 after some reports
said that the company was waiting to receive final permits from the
government. Jio offers fourth-generation (4G) data and voice services, along
with peripheral services like instant messaging and streaming movies and
music.

The company has a network of more than 250,000 km of fiber optic cables in
the country, over which it will be partnering with local cable operators to get
broader connectivity for its broadband services. With its multi-service operator
(MSO) license, Jio will also serve as a TV channel distributor and will offer
television-on-demand on its network.

LYF Smartphone’s

2 https://www.businesstoday.in/.../news/...jio-may...launch-jiohometv.../274999.html

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In June 2015, Jio entered into an agreement with domestic handset maker
Intex to supply 4G handsets capable of voice over LTE (VoLTE).However, in
October 2015, Jio announced that it would be launching its own mobile
handset brand named LYF.

On 25 January 2016, the company launched its LYF smart phone series
starting with Water 1, through its chain of electronic retail outlets, Reliance
Retail. Three more handset models have been released so far, namely Water 2,
Earth 1, and Flame 1.

Jionet Wi-Fi

Prior to its pan-India launch of 4G data and telephony services, Jio has started
providing free Wi-Fi hotspot services in cities throughout India including
Surat, Ahmedabad in Gujarat, and Visakhapatnam in Andhra Pradesh, Indore,
Jabalpur, Dewas and Ujjain in Madhya Pradesh, select locations of Mumbai in
Maharashtra, Kolkata in West Bengal, Lucknow in Uttar Pradesh,
Bhubaneswar in Odisha, Mussoorie in Uttarakhand, Collectorate's Office in
Meerut, and at MG Road in Vijayawada among others.

In March 2016, Jio started providing free Wi-Fi internet to spectators at six
cricket stadiums hosting the 2016 ICC World Twenty20 matches. Jionet was

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made available in Wankhede Stadium (Mumbai), Punjab Cricket Association IS
Bindra Stadium (Mohali), Himachal Pradesh Cricket Association Stadium
(Dharamshala), Chinnaswamy Stadium (Bengaluru), Feroz Shah Kotla (Delhi),
and Eden Gardens (Kolkata) in India.

Jio Apps

Jio sim card pouch as distributed by Reliance Jio Infocomm

In May 2016, Jio launched a bundle of multimedia apps on Google Play as part
of its upcoming 4G services. While the apps are available to download for
everyone, a user will require a Jio SIM card to use them. Additionally, most of
the apps are in the beta phase. Following is a list of the apps:

 My Jio - manage Jio account and digital services associated with it

 Jio TV - live TV channel service
 Jio Cinema - online HD video library
 Jio Chat - instant messaging app
 Jio Music – Jio Music Helps In Listening The Music In Different
Languages And To Save Offline
 Jio4GVoice (earlier, Jio Join) - VoLTE phone simulator
 Jio Mags - e-reader for magazines
 Jio Xpress News - news and magazine aggregator
 Jio Security - security app
 Jio Cloud - cloud-based backup tool
 Jio Money Wallet - online payments/wallet app

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  Jio Switch - To transfer content Between Android To Android, Android To
iOS, Android To Jio Phone, iOS To Jio Phone, iOS To iOS And Jio Phone
To Jio Phone
 Jio Net - connect to Jio Net Wi-Fi

Affordable 4G phones

3Reliance Jio has teamed up with Google to manufacture affordable 4G

handsets. These phones will run exclusively on Jio network. The two
companies are also working on developing software for smart-TV services. Both
were expected to launch in 2017.

JioFi

Jio has also launched Wi-Fi routers by the name JioFi.

Branding and marketing

Jio logo before September 2016

On December 24, 2015, Bollywood actor ShahRukh Khan was appointed as

Jio's brand ambassador.

3 https://en.wikipedia.org/wiki/Jio

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Pokémon Go

Location-based AR game Pokémon Go was launched in India in December,

2016 in collaboration with Jio in which hundreds of Jio stores and other
Reliance marts and shopping malls like Reliance Trends and Reliance Digital
became Sponsored PokéStops and Gyms.

Reception of Jio Prime

By July, 125.5 million Jio customers had opted for Jio Prime. The last date for
registration to Jio Prime membership was 31 March 2017. This was extended
until 15 April 2017 along with an introduction of a new offer, "Jio Summer
Surprise", which gave customers three months of free services. On 6 April
2017, TRAI advised Jio to withdraw this offer.

1.3 Controversies

Issue with incumbents

In September 2016, the Telecom Regulatory Authority of India (TRAI)

summoned Jio and the country's existing telecom operators like Bharti Airtel,
Vodafone, and Idea Cellular to meet and discuss an issue regarding
interconnection between the operators. This was a result after Jio complained
to TRAI and Department of Telecom (DoT) about other operators not honoring
their commercial agreements to let Jio use their network resources. The
company further added that the operators are trying to sabotage its entry into
the telecom scene. However, DoT dismissed the request and directed TRAI to
help settle the dispute amicably. Moreover, the Cellular Operators Association
of India (COAI) requested TRAI to include all the operators in the discussion
instead of the three.

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The incumbent operators had previously approached the country's PMO to
reiterate their stance they "are in no way obliged or in any position to entertain
Jio's requests for interconnection points as they do not have either the network
or the financial resources to terminate the latter's humongous volumes of
potentially asymmetric voice traffic." Responding to this, Mukesh Ambani,
owner of Jio, said, "All operators have publicly said last week that they will
provide this (interconnect and MNP). So, we are waiting. These are all great
companies. They have their own reputations to protect. I am confident they
won't violate the law." Commenting about number portability, he added, "The
number belongs to the consumer. No operator can cause trouble if they want to
change operators."] However, on 12 September 2016, Idea Cellular agreed to
allow Jio to use 196 of its interconnection access point.

1.4 Purpose of the study:

Statement of the problem

Over 75,000 job losses in the telecom sector so far due to the launch of JIO.
Telecom Industry revenue has fallen by 5-10 percent in financial year 2017-18
with bigger players such as Idea Cellular Ltd., Vodafone India and Bharti Airtel
Ltd. seeing a decline at the lower end of that range.

Aim

The aim of the study is to focus on the strategies adopted by Reliance Jio to
vanish other major players of the industry and to study the current pricing and
promotional strategies adopted by its competitors to win back in the market.

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Objective

The objectives of the study are:

 To identify how the entry of Reliance Jio has affected other service
providers like Airtel, Vodafone and Idea.
 To find out the pricing and promotional strategies adopted by Reliance
Jio to rule over the telecom sector of India.
 To understand the rise or fall in the revenue of the telecom industry over
the financial year 2017- 18.
 To examine the strengths and opportunities that the competitors of Jio
may use to regain the market share.
 To understand consumer satisfaction by a comparative study of Jio with
other brands like: Airtel, Vodafone and Idea.

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 Chapter – 2
Review of Literature
2.1 According to a report by Michael Safi, Delhi (Mon 5 Sep 2016
17.28 BST – The guardian) :India’s richest man has promised to shake up the
country’s booming Smartphone market with cut-price 4G services that aim to
bring tens of millions of Indians online.

Mukesh Ambani’s Reliance Jio network officially launched on Monday offering

customers three months of free services followed by free calls and data plans it
claims are the world’s cheapest, some charging 50 rupees, or 56p, per gigabyte.

Jio has already sparked a price war in a market that recently hit 1 billion
mobile phone users, and which is expected to double its number of internet
users to 730m within four years. Ambani, whose father Dhirubhai turned the
polyester and spice company he founded in 1965 into one of India’s most
profitable conglomerates, has marked out data mining as the family’s next
frontier.

“Data is the new oil, and intelligent data is the new petrol,” the Mumbai-based
tycoon told Reuters in March. Bharti Airtel, the country’s largest phone
network, has cut its data prices twice in anticipation of Jio’s launch. Vodafone,
India’s second largest network, has argued its cheapest data plans offer better
rates than Jio’s.

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2.2 According to Business standard, Surajeet Das Gupta | New Delhi, Last
Updated at September 5, 2017 13:53 IST: The past year has been the best
and worst of times for the telecom industry. Unlimited free voice calls and an
explosion of data at rock bottom prices were accompanied by older telecom
operators seeing their profits crash since the launch of Reliance Jio’s 4G
services, which complete one year next Tuesday.

India has never before seen such an explosion in data use as Jio upended the
strategy of incumbent telecom operators of keeping prices high. It dropped data
prices by over 95 per cent and the average use of data per subscriber shot up
fivefold to 1 gigabyte (GB) in March.

4The total data use in the country has risen from 200 million GB a month
before Jio to 1.5 billion GB a month now, making India the world’s largest data
user, overtaking the United States (710 million GB) and China (630 million
GB). And this surge has come from only 282 million customers; China’s lower
usage is spread across 800 million customers.

Jio has grabbed 43 per cent of the mobile broadband subscriber market, more
than the three incumbent telecom operators — Bharti Airtel, Vodafone and Idea

4http://www.business-standard.com/article/companies/within-12-months-jio-s-data-play-has-changed-indian-
telecom-117090101180_1.html

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Cellular — put together. Its customers use over 1.2 billion GB of data a month,
80 per cent of all the data consumed in the country.

A company official said, “India has become the biggest consumer of mobile data
in the world ahead of the US and China.” The official added, “We have done it
with only 283 million data customers while China has 800 million, showing the
huge explosion of data usage in the past year, and there’s potential of much
more in the near future.”

The Jio data costs around Rs 11 for 1GB a day. Jio also used technology to
offer free voice calls for the first time in India. The Voice over Long-Term
Evolution (VoLTE) technology takes only Rs 0.1 paisa to produce a call minute.
Competing telecom companies that were initially skeptical about VoLTE voice
quality are following suit.

The competition has also traditionally shied away from offering their customers
bundled handsets. Realizing potential customers did not have many choices in
expensive 4G LTE handsets; Jio launched its own range of cheap phones, LYF.
With international handset makers joining the party, Jio has now taken a step
back.

But with 4G feature phones — priced at Rs 1,500 to be returned in three years

— Jio is going a step further.

Having 125 million customers, Jio now wants to expand its consumer base to
the over 500 million feature phone users in the country. These consumers will
have to buy new 4G phones and Jio is offering handsets that are, in effect, free.
The plan may, however, not be a runaway hit considering the subsidy on the
handsets Jio will pay out and the high monthly commitment by subscribers.

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A consequence of Jio’s entry is a shakedown in the telecom industry. The new
operator has been grabbing subscribers from smaller players whose survival is
now at stake. This could speed up if Jio’s plan of acquiring an additional 150-
200 million customers through 4G feature phones plays out.

Analysts see five players in the telecom industry eventually - Jio, Idea-
Vodafone, Bharti and BSNL - with the top three taking nearly 90 per cent of the
market. Reliance Communications, Aircel and MTS are moving fast on
consolidation and could eventually merge with Jio. Tata Teleservices, after its
aborted talks with Bharti, will find it difficult to survive as an independent
player with less than 4 per cent market share.

Clearly, Jio is leveraging the slow adoption of 4G by its rivals, except Bharti.
Rajan Mathews, director-general of the Cellular Operators Association of India
(COAI), says only 35 per cent of the 1.6 million base transceiver station cell
towers in use are 4G enabled and it will take around three years to reach 90
per cent. In contrast, all cell towers used by Jio are on 4G.

Jio’s pricing has naturally hurt the incumbent operators, which are groaning
under a $65 billion debt pile that includes payments for spectrum. Average
revenue per user, according to the Telecom Regulatory Authority of India
(TRAI), has declined 32 per cent between the September and March quarters.
The COAI reckons revenues of the major telecom companies fell 15 per cent,
year on year, in the June quarter and profits plunged 160 per cent.

This apart, a schism has opened up in the industry over inter-connect charges.
Since 80 per cent of calls from Jio’s network terminate on theirs, the older
telecom companies say they are virtually subsidizing Jio’s calls. While Jio pays
14 paisa for call termination - and it is pushing TRAI to eliminate the charge
altogether - their costs are more than double. If interconnect charges are
scrapped, the industry says it will lose over Rs 6,000 crore. Jio, on its part,

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claims the cost for termination is less than 1 paisa and incumbent operators
are punishing customers for their inefficiency.

5With an investment of over Rs 200,000 crore, the question on everyone’s mind

is when will Jio break even? Its competitors allege it has been given preferential
treatment by the regulator, which allowed it to offer services free for six
months. The freebies are now over, but Jio will need to notch up subscriber
numbers and margins to prove its skeptics wrong.

5 http://www.bgr.in/news/reliance-jios-4g-network-commercial-launch-delays-frustrating-investors-report/

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2.3 According to India Infoline News Service | Mumbai | March 15, 2017
17:24 IST: Major telecom players, Reliance Jio, Bharti Airtel, Vodafone and
Idea Cellular together have spent around Rs 1,000 crore on advertising alone,
in 2016, as per the Pitch Madison Advertising Report 2017.

Reliance Jio’s free of charge data offers and calls triggered exuberant ad
spending by its peers, Bharti Airtel, Idea Cellular and Vodafone, which
aggravated their advertising expenses by nearly 50% in 2016. It is anticipated
that they could further aggravate the spending by 15-20% in 2017.

According to the much acclaimed report almost half of the total was spent by
Bharti Airtel, summing up to Rs 450-550 crore vs. Rs 250-350 crore spent over
2015, whereas Jio has just spent Rs 100-150 crore for the same purpose.

Jio very recently crossed 100 million subscribers in a mere 170 days, and it is
a clash of the titans. Sam Balsara, chairman and managing director at
Madison World said, “We expect both Jio and Airtel to continue aggressive
spending and if the Idea/Vodafone merger operationalized during the year, they
will join in.”

All in all 2017 is set to witness a major struggle for existence among the
telecom players even as they go in for M&As, discounts and aggravated ad
spending to woo customers, who will eventually benefit from this mad rat race.

2.4 Aveek Datta Forbes India Staff : Published: Mar 3, 2017: After
announcing its entry into the telecom sector in June 2010 through the
acquisition of Infotel Broadband Services, which won pan-India 4G broadband
wireless spectrum through a government auction, it took Jio over six years to

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put its infrastructure, including an extensive countrywide network of optic fiber
cables, in place before announcing the commencement of commercial
operations. While the delay in rollout over the last few years led many analysts
to seek visibility on the conglomerate’s telecom plans, the rationale behind
taking time to patiently build its entire network before launching services, is
now coming to the fore.

“Jio’s strategy is to build huge capacity. According to the Telecom and

Regulatory Authority of India, overall data consumption in the industry stood
at 155 million GB in the first quarter of 2016-17. Jio management indicated
that currently about 1billion GB per month data is getting consumed on Jio
and that it will have the capacity to offer about 4 billion GB data per month by
end-FY17,” says a March 2 report by Motilal Oswal. “According to the
management, it should be able to cater to 60 percent of estimated data demand
in FY21 of 6 billion GB per month.”

The Jio management impressed upon analysts that the high number of cell
sites and spectrum that it possesses, along with its relatively deeper fiber
backhaul of 60 percent cell sites (versus a ratio of 20 percent for incumbent
operators) and a better signal-to-interference-plus-noise ratio gave it a
competitive edge over incumbent as the latter go about deepening the reach of
their respective 4G services to compete with Jio. In its investor presentation,
Jio also stated that re-farming 3G airwaves for 4G use, which incumbent
Telco’s may seek to do, would be costly and challenging due to the upgrades
needed to network equipment such as base transceiver stations and antennas.
This, according to the company, will give it a capacity lead over rivals for a long
time.

Ambani isn’t going to rest easy by simply creating one of the world’s largest
telecom networks. Though an integral one, that is only one part of the game
plan. The second and equally critical component of Jio’s strategy is to sweat
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the assets it has created to offer a whole host of digital services to its
subscribers. Some of these services were on display during the analyst meet.
Apart from the content and financial services that Ambani has already
extensively talked about, Jio is also working on digital platforms such as
connected cars, home automation, Internet of Things and surveillance systems.

Jio’s aggressive entry into the market with its paid services, backed by a robust
and future-ready backend infrastructure, may be a short-term negative for the
telecom sector due to the challenges faced by other telecoms. But the entry of
the new challenger will also lead to long-term benefits by way of expansion of
the overall telecom market (especially for data services), which other industry
players can benefit from.

Post the launch of Jio, the market for data consumption in India has exploded.
From an average consumption of 200 million GB per month before Jio’s
launch, the Indian market is now using data to the tune of 1 billion GB per
month with Jio in the picture. At the current level of consumption, India has
become the world’s leading mobile data market, surpassing global leaders in
this space including US and China.

Furthermore, of the Rs3 lakh crore-mobile data market that Jio foresees in
India by 2020-21, the telecoms is targeting a 50 percent market share,
implying potential for other industry players to exist. Although, the number of
players left in the market to compete with Jio may be fewer with a wave of
consolidation sweeping through the sector, which has seen the likes of Bharti
Airtel and Telenor combining assets and operations; along with a potential
merger between Vodafone and Idea; and a three-way amalgamation between
the Anil Ambani-led Reliance Communications, Aircel and Sistema Shyam.

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2.5 Javed Anwer, New Delhi, March 3, 2017 (India Today): Rs 350. It seems
that this is all Airtel, Jio, Vodafone and Idea want from you as the monthly
recharge money for your phone number. Suddenly, the Rs 350 has become the
most hotly contested price point among the phone companies. Of course, it all
started with Jio, which announced the Prime membership and then
accompanied it with the Rs 303 plan. But today, the old guard has struck
back, giving consumers plans that are as good as Jio's Rs 303 plan.

6So what are the plans? Let's quickly go through them

Jio Rs 303 plan: This plan requires Jio Prime membership that costs extra Rs
99 per annum. But that is pretty low price. It's just little more than Rs 8 per
month. Once you have the Jio Prime and the Rs 303 plan, you will get 28GB
data per 28 days at 4G speed. Every day, this data will have a limit of 1GB. If
you exhaust that limit, your Jio data connection will still work but at a lowered
128kpbs speed. You will also get unlimited calls and messages. And there are
6https://www.indiatoday.in/technology/features/story/fight-to-death-jio-airtel-vodafone-idea-battle-for-your-rs-
350-963809-2017-03-03

Page | 25
no roaming charges. Finally, too sweeten the deal, Jio is also bundling a Rs
201 plan with it for free. This will give users additional 5GB data, although to
avail it users have to subscribe to Rs 303 plan before March 31. This is a
seriously heavy blow from Jio to Airtel, Vodafone and Idea. But they have now
responded.

Vodafone Rs 346 plan: This is the most comprehensive and serious challenge
Jio is facing. In its simplicity and in its data rates, Vodafone not only matches
Jio but also surpasses it in some way. You don't need any Prime or special
membership for this plan, although you do need to be a pre-paid users. But
once you subscribe to this plan, you get 28GB data for 28 days. This plan, just
like Jio plan, limits 4G data speed to 1GB per day. But unlike the Jio plan, it
doesn't give users unlimited data. Although it does offer free unlimited calls
and messages and convenience of free domestic roaming. But that is not all.
The Vodafone plan also gives users double the data (56GB) for double validity
(56 days) for one month when they subscribe to Rs 346 plan. Offer is available
only till March 15.

Airtel Rs 349 plan: Airtel too has responded. Available to pre-paid users, the
Rs 349 plan gives users 28GB data with FUP of 1GB per day. However, this
1GB FUP is further divided. 500MB of this data is available only between 3am
to 5am. This means only for 2 hours and that too at hours when the world
wants to sleep and not browse the web. For the rest of day, users get only
500mb. Other than that, users also get free unlimited domestic calls, no
roaming charges and unlimited messages.

Idea Rs 345 plan: Idea to has something to counter. Though, the plan of Idea
is weakest among all, it is offering 14GB data at a recharge of Rs 345, along
with unlimited calls and messages. Given that the amount of data is less, its
daily FUP is also less. It offers 500MB per day of data to subscribers of this
plan.

Page | 26
A fight to death?

The fight today among the telecom companies in India suddenly makes India
one of the countries with cheapest wireless data rates. In fact, India probably
now has the cheapest wireless data, although quality of service can still be
improved. And the repercussion of such free fall in data and call rates are going
to be big.

Although earlier the data prices were arbitrarily and exorbitantly high in India,
now suddenly they are shockingly low. Where these rates will lead the industry
is something only time will tell but the chances are that this is the beginning of
the fight. There are two sides to the fight. Jio needs to offer dirt cheap rates so
that it can gather the mass and momentum within the industry. If it has to
retain its over 100 million users, who for now are using Jio for free, it has to
offer data at throwaway prices. And it is doing exactly that.

For Airtel, Vodafone and Idea it is all about guarding their turf. They know that
in this competitive industry loss of even an inch will suffocate them. So they
are prepared to fight, fight until they are bleeding because there is no other
way but to brace and hit back. Yet, it is a fight they pick reluctantly. Airtel
chairman Sunil Mittal captures it best. "Tariffs that they (Jio) have announced
are still very aggressive, which means you got to respond. You got to do more
package... you have to throw in more data. All those things need to be done...
But yes, still to our mind, it is the pricing which is unsustainable," said Mittal
a few days ago.

There is another party in this fight: users. And they are going to win in the
short run. In India, where wired internet is in bad shape, now suddenly
wireless has become so cheap that for many people it will easily fulfil their
needs. Even if you live all the time on Facebook, 28GB per month on a phone
will be plenty for you. And finally it is cheap, like so very cheap.

Page | 27
In the long run, we don't know how all of this will play-out. For now, as Mittal
says, these rates indeed look unsustainable. But then business models change,
something that Jio is talking about, and companies find another way to sustain
the business. After all that is how markets rebuilds and reshapes itself after a
disruption. And today shows that Jio is a disruption. It is changing the Indian
telecom industry and while the ride ahead may turn out to be rocky, for now as
a consumer you can go ahead and enjoy that dirt-cheap high-speed data.

2.6 Press Trust of India | New Delhi Last Updated at July 3, 2017 21:52
IST: Leading telecom majors Bharti Airtel, Vodafone and Idea Cellular saw
their market shares shrinking in 2016, giving way to aggressive newcomer
Reliance Jio that ended the year with 6.4 per cent market share, as per data by
telecom regulator TRAI.

According to the yearly telecom services performance indicator report of the

Telecom Regulatory Authority of India (TRAI), Bharti Airtel saw its market
share dip to 23.58 per cent at the end of December 2016 from 24.07 per cent
in the previous year.

Page | 28
7Interestingly, the loss of market share came even as the country's largest
operator saw its subscriber base swell by close to 9.3 per cent. It added 22.56
million new users during 2016.

Vodafone added 11.09 million new users during 2016, but saw its market
share slip to 18.16 per cent from 19.15 per cent in December 2015.

Reliance Jio — which began its commercial operations in early September 2016
with free voice and data offerings — ended the year with 6.4 percent market
share and 72.16 million subscribers.

7 https://www.moneycontrol.com

Page | 29
Idea Cellular, had a market share of about 16.9 per cent with a base of 190.52
million customers as on December 2016. This is a tad lower than 17.01 per
cent market share that the Mumbai based operator had in 2015. India's
wireless subscriber base increased to 1,127 million at the end of December
2016, from 1,010 million at the end of December 2015, a growth of 11.52 per
cent. "During the year 2016, net addition of 116.48 million wireless subscribers
was recorded," the TRAI report said.

Page | 30
 Chapter-3
Methodology
3.1 The primary data will be collected by a structured questionnaire circulated
to Reliance Jio users via email. The other data base of this study will be
secondary and explorative in nature. The major source of data of this study is
official website of the company. Sources of secondary data were collected from
reports, records, journals, case study, magazines and e-newspapers.

DESIGN: This case study would be exploratory in nature used to provide

complete information as per the designed objectives.

SAMPLE: Sample would be taken male and female between the age group of
18-60.

SAMPLING METHOD: The sampling method used in this study is simple

random sampling.

SAMPLE SIZE: Sample size would be 100 respondents from different states of
India.

DATA: The data used in this assessment will be collected from –

1. Paper based sources - Journals, abstracts, research reports, case study,

conference papers, annual reports, In-house magazines of organization.

2. Electronics Sources – Online database, LinkedIn articles, E-newspapers,

Websites, Twitter polls, online survey through questionnaires.

Page | 31
3.2 Variables Factor Name
Connectivity is good in Factor 1: Reliability
Reliance Jio. There are
no issues in usage of
Jio.

Jio has organized Factor2:

transactions. Faster Responsiveness
redressal of grievance.

Complete solution is Factor 3: Fulfilment

made at one point.
Services are more in Jio
than others.

Making payment has Factor 4: Perceived

become easier The ease of Use
balance can be checked
effectively

It takes less time to Factor 5:

make transactions. Jio Effectiveness
has good support
system

Monitoring is easy. Factor 6: Advanced

Jio Services are Technology
advanced.

Page | 32
Jio services are Factor 7: Price
economical.
The value offering is
good.

Referral is useful in Factor8: Social

case of Jio. Family use Influence
is frequent.

Performance of Jio is Factor 9: Performance

good Expectancy
The expectations are
always met.

3.3 TIME FRAME:

Research Proposal 3 Days
Preparation of Questionnaire 2 Days
Collection and compilation of responses 5 Days
Primary data research 5 Days
Secondary data research 7 Days
Analysis and data interpretation 7 Days
Compilation of report 3 Days
Total 1 Months 2 Days

3.4 BUDGET:
Printing & Binding of the Research report 1200 approx.

Page | 33
 Chapter-4
Findings
4.1 Identifying how the entry of Reliance Jio has affected other
service providers like Airtel, Vodafone and Idea

Jio took the cellular industry by storm last immediately after its entry into the
market. Ever since the Mukesh Ambani led company has entered the race, it
looked like its competitors were looking at a “Us against Jio” kind of war. Jio
has rolled on like a juggernaut almost squeezing out every bit from three of the
largest players in India namely, Bharti Airtel, Vodafone and Idea Cellular by
strongly grown its subscriber base since its launch in September last year.
According to TRAI, last month the telecom subscriber base in India crossed the
1.2 billion mark and Jio led the race for most number of new additions.
Reliance Jio added 4.7 million users month on month as compared to its
competitors. Airtel added 2.09 million new customers followed by BSNL,
Vodafone and Idea Cellular.

How has Reliance’s entry affected the quarterly results of the top 3?

Bharti Airtel –
The subscriber base for Airtel did not feel a massive blow. In the quarter that
ended in September 2016, Airtel had 36308.8 crore subscribers and by the end
of December 2016 there was only a marginal rise in the number and it stood at
36456.4 crore. The fourth quarter that ended In March 2017 saw Airtel have a
registered user base of 37235.4 crore while in the latest quarter release (Q1)
the subscriber base stood at 37987 crore.

Page | 34
Unlike its user base, Airtel felt the shock of Jio’s entry in its total revenue
earning. In the quarter ended September 2016, the total revenue was Rs
24651.5 crore and by the third quarter last financial year the revenue dropped
to Rs 23335.7 crore. The total revenue dropped further in the last quarter for
the financial year as Airtel recorded revenue of Rs 21934.6 crore but saw a
marginal rise in the first quarter this financial year as the total revenue stood
at Rs 21958.1 crore.

It looks like Airtel saw a humungous loss with the entry of Jio. The net income
had the largest setback as it dropped 75 per cent year on year to Rs 367 crore
while this was a marginal drop from the previous quarter which was recorded
at Rs 374 crore rupees. The net income in the quarter ended December was Rs
503 crore as compared to Rs 1460.7 crore in the quarter that ended in
September.

CEO’s statement
In a statement after the release of the Q1 results, Gopal Vittal, MD and CEO,
India & South Asia, said: “The pricing disruption in the Indian telecom market
caused by the entry of a new operator continued with industry revenues
declining over 15% Y-o-Y, creating further stress on sector profitability, cash
flows and leverage. Consequently, our revenues declined 10% and EBITDA
margin eroded by 5.3% Y-o-Y. We remain committed to providing the best value
and experience to our customers and continue to invest towards it. As a result,
our network witnessed data and voice traffic growth of 200% and 34% Y-o-Y
respectively. We also added 5.2 million data customers in the last quarter – our
highest ever.”

Vodafone
On 20 March 2017, Vodafone announced an agreement to combine its
subsidiary, Vodafone India (excluding its 42% stake in Indus Towers), with Idea
Page | 35
Cellular.

During the first quarter Vodafone’s customer base grew by 2.9 million (Q4: 4.4
million) and ended the quarter with a closing customer base of 211.9 million.
Data browsing revenue declined -20.4%* (Q4: -15.9 %*) reflecting further ARPU
dilution from lower unitary prices, which declined -67% year-on-year (Q4: -
38%).
Vodafone recorded a 14.2% decline in voice revenue in the April-June period as
compared to the 13.2% fall in the prior quarter; the company said “The benefit
of higher incoming revenue and a larger customer base was offset by a 32% on-
year decline in voice prices as the market moved to unlimited voice tariffs.”

CEO’s statement
In an interview with exchange4media last month, Sunil Sood, CEO, Vodafone
India, said, “Competition in the telecom sector has always been stiff, there have
always been new entrants, a decade ago we had almost 10 new operators
coming in, now we have another one, we welcome the competition and it has
always made us strive that much better for the customers’ benefit. So once
again I see consumers benefit from all that is happening because you have to
remodel what you are doing to make it more effective, remove the wastage and
be more efficient. Therefore that remodeling of your company helps you to give
better offers to your consumers at more appropriate prices and other offers.”

Idea
Idea’s subscriber base has seen a growth in all the previous quarters except Q1
this year where the customer base stood at 189 million as compared to 189.5
million in the previous quarter ended in the last financial quarter (Q4). By the
end of Q2 last financial year the customer base was 185.2 million as compared
to 178.8 million in Q1.
Page | 36
The company reported losses of Rs 385 crore between the second and third
quarter while between the fourth quarter of the last financial year and the first
quarter this financial year the losses were reported at Rs 815.9 crore.
Even though Airtel and Vodafone have had a decent run in increasing their
subscriber base, while Idea has just seen a marginal change there is no
evidence of successful incomes and revenues. Over and above the raging war
between telecom industries customers are making the most of low call rates
and data charges. With the merger of Vodafone and Idea slated for next year
and the with reports doing the round for Idea’s smart phone that will compete
with Reliance’s Rs 1500 phone, the next three quarters will reveal a clearer
picture of the cut-throat economic scenario in the Telecom sector.

Page | 37
4.2 Pricing and promotional strategies adopted by Reliance Jio
to rule over the telecom sector of India

Reliance Jio Infocomm aims to capture half of India’s revenue market share
and aims for 50% EBITDA margins, underpinned by increased data
consumption and service quality the company expects will draw high-paying
consumers to the carrier owned by the country’s richest man.

In a presentation to analysts, Jio said data will be at the vanguard of its

planned market-share expansion. The company did not specify the time-frame
for reaching its financial targets, but people familiar with the matter said these
were expected to be met in 2020-21.

In the December quarter, Bharti Airtel had a market share of 33.1%, Vodafone
India owned 23.5%, and Idea Cellular had 18.7%. They were followed by Tata
Teleservices Ltd (TTSL), Aircel and Reliance Communications with 6.2%, 5.5%
and 4%, respectively, according to brokerage HSBC. Similarly, Bharti Airtel had
an ebidta margin of 36.7% and Idea Cellular 25% in the December quarter. In
the six months to September, Vodafone India's ebidta margin was 29.6%.
Vodafone India and Idea are in talks for a possible merger.

Deutsche Bank Equity Research Asia, which attended the first analyst meeting,
held by Jio, said the company expects India’s mobile market will expand by
50% over five years to $45 billion (Rs 3 lakh crore) versus $29 billion (Rs 1.94
lakh crore) currently. Industry revenue growth is likely to drive government
revenue by 50%, Jio said in its presentation.

To be sure, some analysts considered Jio’s targets aggressive. Bank of America

Merrill Lynch said both targets appear “very ambitious,” adding: “We note that

Page | 38
not many telecoms in the world are consistently able to increase average
revenue per user (ARPU), a key thing which we think Jio is banking on to help
it generate strong revenue/8ebitda.”

Deutsche Bank-Equity Research-Asia said: “Contrary to investor expectations,

Jio believes the Indian telecom market is likely to grow by 50% over five years
driven by ARPU growth. Jio expects data yields to stabilize at around Rs50/GB.
The yield under their current plans is around Rs 30/GB, which they expect
would rise over time.”

Jio’s financial projections are premised on explosive growth in data. It said the
overall industry revenue in India will touch Rs 3 lakh crore in the next three-
four years.

About Rs 1 lakh crore in voice revenue will shift to data, pushing the latter’s
growth to Rs 1.3 lakh crore in the same period.

Bank of America Merrill Lynch expects Jio to aggressively target enterprise

customers. “Over a longer term, we got a sense that Jio is keen on raising
consumer yields/ARPUs. We consider it beneficial for incumbents and the
industry,” said its report.

Leading global consultants have forecast demand for data at 500-600 crore GB
per month. At a yield of Rs 50 per GB, it translates to Rs 3-3.6 lakh crore per
year, which is equivalent to 1.35-1.6% of projected GDP, but still lesser than
2.5% in developed economies, said the Jio presentation.

The carrier estimates that there are around 263 million, smart phone users,
with an effective ARPU of Rs 329 and 496 million feature phone users with an

8 Earnings before interest, taxes, depreciation and amortization

Page | 39
effective ARPU of Rs 172.

Deutsche Bank Equity Research Asia’s report said Jio expects unique
subscribers at around 800 million in the medium term and believes around
400 million users can afford to pay about Rs 500 on digital services, which is
much higher than the ARPU of Rs 179 in 2009.

Jio’s assertion comes a few days after the telecom Commission, the country’s
apex policy maker for the industry, pulled up the regulator for allowing the
company to continue promotional offers, costing the government Rs 685 crore.

With seven customers joining every second since September 5, Jio disrupted
the industry with its ‘Welcome’ and ‘Happy New Year’ offers that provided
subscribers free voice and data services along with access to the company’s
digital content ecosystem. Following the inevitable price war, Bharti Airtel's
profit fell 55%, Vodafone India’s on-year service revenue fell 1.9%, while Idea
posted its first ever loss since listing in 2007 in the December quarter.

The 4G entrant has also informed analysts that for incumbents, reframing 3G
spectrum to use for 4G is very costly and challenging.

Bank of America Merrill Lynch said the pressure on incumbents’ ARPU will
continue since companies such as Bharti Airtel will try to match Jio’s offers.
This week, Sunil Mittal-owned Bharti Airtel scrapped roaming charges for
outgoing and incoming calls and sms and data usage within India. Ambani
owned Reliance Jio expects to gain over 50% of revenue market share with
operating margins of over 50%, based on huge expected data demand and
growth, it said in its analyst presentation. Sources said that Jio should achieve
this in the next 3-4 years, but the telecoms did not respond to ET's query on
the same.

Page | 40
As of December 31st, Bharti Airtel had a market share of 33.1%, Vodafone
India owned 23.5%, Idea Cellular owned 18.7%, followed by TTSL, Aircel and
RCom with 6.2%, 5.5% and 4% market shares, respectively, according to
brokerage HSBC, which analyzed Trai data.

Data will be the game changer in Indian telecom industry that is going through
one of its biggest price battles, post Jio’s entry. In the analyst presentation, the
company said overall data revenue market in India will touch Rs 3 lakh crore
in the next three-four years. This will be caused by the shift from voice to data
for subscribers. There will be a drop of Rs one lakh crore from voice revenue
which will shift to data, pushing the latter’s growth to Rs 1.3 lakh crore in the
same period.

The industry revenue growth is likely to drive government revenues by 50%,

the telecoms said in its presentation. This is ironical, since last month telecom
commission had pulled up telecom regulator of India (TRAI ) for allowing Jio to
continue for its freebies under different promotional offers , that had cost the
government Rs 685 crore.

Reliance Jio , which had seven customers join in every second since September
5, disrupted the Indian telecom industry with its ‘Welcome’ and ‘Happy New
Year’ offer since its entry on September 5, which offered free voice and data
services along with access its digital content ecosystem. This had forced
incumbents to slash tariffs, which impacted their revenue and force
consolidation in the industry. In the third quarter, Bharti Airtel's profit plunged
55%, Vodafone India’s on year service revenue fell 1.9% which Idea posted its
first ever loss since listing in 2007.

The telco, in the presentation on Monday, said that the industry growth was
low in last 5 years, but next 5 years will see rapid growth with data explosion.

Page | 41
Leading global consultants have forecasted demand for data at 500-600 crore
GB per month. At yield of Rs 50 per GB it translates to Rs 3.0 - 3.6 lakh crore
per year, which is equivalent to 1.35 -1.6 % of projected GDP, but still lesser
than 2.5% in developed economies, stated the presentation.

Reliance Jio estimates that 400 million subscribers in India can now afford to
spend Rs 500 and above on digital services, which is much higher than Rs 179
average revenue per user (ARPU) in 2009.

It claims that the Indian data market expanded by six time with introduction of
Jio in less than 6 months from 20 crore GBs a month to 100 crore GBs a
month.

Jio’s VoLTE traffic of 200 crore minutes a day is equal to Vodafone’s circuit
switch voice or traditional voice service, the telecoms said. It added that bulk of
network is already built, which can support more than 60% of data demand
2020-2021 in India. The telecom currently caters to 85% of mobile data traffic
in India today. The firm said it has filed 53 patents till now.

The firm also said that it has capabilities to launch 5G services as well. Till
now, Jio offered only 4G services .

Page | 42
Jio pricing chart

Jio and others

Page | 43
Promotion strategy:

Some of India's biggest publications featured Reliance Jio advertisements on

their front page, not a surprise given the announcement made by Mukesh
Ambani. What was a surprise thought was that the advertisements featured
Prime Minister Narendra Modi.

Page | 44
 The advertisement said: "In the
journey of time, there come a few
life-changing movements. Our
Honorable Prime Minister's
inspiring vision of a Digital India is
one such movement. Jio is
dedicated to realizing our Prime
Minister's Digital India vision for
1.2 billion Indians".

The advertisement obviously raised

eyebrows and invited all kinds of
reactions from people. The
advertisements come after Ambani,
in his speech to the company's
shareholders on Thursday, had
openly declared that he is fulfilling
Narendra Modi's dream of a
"Digital India".

Many took to social media to bash

Ambani-owned Reliance, calling it a
political propaganda.

9 https://thewire.in/84049/no-permission-taken-reliance-jio-modi-advertisement-says-govt/?fromNewsdog=1

Page | 45
4.3 The rise or fall in the revenue of the telecom industry over
the financial year 2017- 18

The year 2016 is a landmark year in the Indian telecoms industry. The much
awaited sector consolidation set-in. Some of the key drivers for market
consolidation include increasing pressure on profitability, hyper-competition,
spectrum trading and sharing guidelines and favorable M&A policy. In
addition, the sector also witnessed a number of spectrum trading and sharing
deals.

In August 2016, spectrum auction took place with the largest quantum of
spectrum being made available by the Government of India. However, the
auctions witnessed muted response, primarily on account of high reserve
prices. Of the 2,355 megahertz (MHz) total spectrum across seven bands put
up for auction, only 40% of the spectrum got sold with no activity seen in
700MHz and 900MHz band. Telecom operators bid selectively to plug coverage
gaps and enhance spectrum portfolio, especially for 4G services.

In another significant development, 2016 saw the entry of a Greenfield 4G

operator, introducing aggressive tariff plans, with free voice calls and low-cost
data. It is expected to usher in exponential growth in data. Leading operators
have launched 4G services in select circles, which would further boost data
growth.

The Indian telecoms sector has traditionally been voice driven. Commoditizing
voice calls and offering tiered data tariffs would shift the business model from a
voice to a data centric one.

India is already one of the largest Smartphone markets in the world in terms of
volume. According to Ovum, India’s smart phone penetration stood at 24% of
total connections in 2015. The average handset price for Smartphone has been

Page | 46
declining, with an entry-level 4G smart phone available for INR 2,999. Prices
are expected to further reduce helping drive data usage.

The average data consumption per user is increasing, with increased adoption
of smart phones and availability of content. For example, 3G data consumption
per user has grown to 753 MB/month in 2015 as compared to 338 MB/month
in 2011. The overall network traffic growth is expected to mirror the increases
in average data consumed on a handset as more people start using advanced
data services. The overall data traffic grew by 50% y-o-y in 2015, driven by an
85% surge in 3G data traffic, according to the Nokia Mobile Broadband Index.

Mobile banking transactions are on the rise due to increased Smartphone

adoption. Between FY13 and FY16, mobile banking transaction volume and
transaction value have increased at a CAGR of 90% and 306%, respectively.
This reflects that wireless smart devices are becoming a preferred medium for
banking transactions.

In addition, the digital payments ecosystem is growing by leaps and bounds in

India. This is largely possible as India is transitioning to a digital economy.
Digital wallets witnessed exponential growth in the back of the recent
demonetization drive by the Government of India. The proportion of mobile
wallet transaction volume to total payment transactions has increased from
0.4% in FY13 to 4% in FY16, and is expected to grow significantly in future.
Further, with the launch of Payments Bank by a leading operator in 2016,
financial inclusion for the unbanked would get a major boost.

Mobile tariff in the sector - How is it going to impact sector in 2017?

For a large part of 2016, mobile tariffs remained steady. However, with the
disruptive entry of a new operator, the sector witnessed innovative tariff
structures. The biggest impact is the advent of unlimited voice calls along with
tiered data plans for a fixed rental.

Page | 47
The entry level unlimited voice call tariff (primarily on-net and in few cases all
call) is similar for most of the operators and range between INR145 and INR
149. Along with unlimited voice, 300 MB of mobile data is bundled. This price
point is expected to resonate with a majority of the population, as it is closer to
the monthly average revenue per user (ARPU) for access services at INR141 (for
quarter ending June 2016) and that of operator voice ARPU. For INR345 to
INR350, most of the operators are offering unlimited voice calls to all networks.
The year 2016 ushered in bundled voice and data integrated plans.
Increasingly, this is going to be the norm in 2017, with more innovative and
segmented packages in the offering.

Headline mobile data tariffs have largely remained stable, but operators have
increased data allowance significantly. Effectively, the price per GB is declining.
For higher data denominations over 2GB, the price cuts had been up to 67%,
while for data recharges of 1GB or lower, price cuts of up to 45% had been
initiated. In the short term, mobile data revenue growth is likely to be affected,
due to the lower tariff.

However, in the long term lower tariffs are not sustainable, with high spectrum
fees and ongoing capital expenditure requirements. To put it into perspective,
the cumulative bid in spectrum auctions since 2010 amounted to INR3.5 lakh
crore, which is quite significant considering sector revenue of approximately
INR2.6 lakh core (FY16). As a result, the sector debt level has increased to
approximately INR4.2 trillion after the 2016 spectrum auctions.

Moreover, the financial distress of operators and continuous pressures on

profitability has set-in sector consolidation. The Indian telecoms sector is likely
to stabilize to a five to six players in the long term. Further decline in data
tariffs and erosion of domestic voice revenue would impact operators'
profitability and sustainability.
As compared to developed and emerging telecoms market, India boasts of one
of the lowest data tariffs. For instance, data rate for 1 GB data in India before
Page | 48
tariff revision was priced at US$3.5. In comparison, the cost of 1 GB data
equates to: US$30 in Japan; US$18 in Korea; US$15 in UK, China and
Germany; US$10 in the US; US$7,5 in Spain; US$6 in South Africa.

What is the level of pressure on telecoms margin due to dip in tariff?

10Considering that wireless voice revenues accounted for approximately 65% of

the total circle revenues in India in FY16, offering free voice is likely to have the
biggest impact on operator revenue. Going forward, data revenues are likely to
cannibalize voice revenues as well. This is adversely going to impact margins of
operators. Customer acquisition cost would increase for operators owing to
increased competition. In addition, operators are likely to face increased
pressures to retain customers, offering freebies and larger allowances,
adversely impacting margins.

With prevalent pricing pressures due to free offers and lower tariffs, operators
are likely to witness stagnant EBITDA growth for the next six to eight quarters.
It is going to be impacted by near-term decline in wireless data revenue growth.
Data revenue growth is likely to decline to 2% q-o-q and 13% y-o-y by 4Q17, as
compared to 50% y-o-y growth in 4Q16. In addition, voice and data realization
are expected to drop significantly over the next few quarters. Overall, margins
are expected to decline by 250 to 300 basis points in 2017 and remain under
pressure in 2018 as well.

With lower incremental revenue and stagnating EBITDA, profitability of

operators is expected to remain subdued. A lot would depend on the data
volume growth of all operators, once the sector EITDA is stabilized.

10 https://en.wikipedia.org/?title=Reliance_Jio_Infocomm_Limited&redirect=no

Page | 49
After almost a year of declining revenues, there is finally a silver lining for
telecom operators if the latest numbers from the Telecom Regulatory
Authority of India (Trai) on the sector’s performance during the July-
September quarter of 2017-18 are to be believed.

revenues, there is finally a silver lining for telecom operators if the latest
numbers from the Telecom Regulatory Authority of India (Trai) on the sector’s
performance during the July-September quarter of 2017-18 are to be believed.
The industry revenue from data alone rose for the second consecutive quarter
on a sequential basis. Data revenue during Q2FY18 rose by a staggering 59%
to Rs 11,900 crore, compared with Q1FY18, registering a quantum growth
quarter-on-quarter. On a year-on-year (Y-o-Y) basis, data revenue grew double-
digit at 27% from Rs 9,400 crore in Q2FY17. Analysts said revenue from data
rose in FY18 as Jio started charging its subscribers from April 1, 2017.
Besides, when the company revised its tariff plans in July 2017, they became
costlier by around 33% for consumers. The move also provided the industry
with an opportunity to stem the free fall in ARPU levels seen in the past
quarters. According to Kotak Institutional Equities, the ARPU range of Jio’s
plans announced in July stood at Rs 122-661, as against Rs 97-630
announced earlier. Besides, as operators came out with more bundled offers to
not just ring-fence their higher ARPU subscribers but also to add more data
users and encourage 2G users to upgrade to 4G, consumption rose manifold.
Average data consumption per subscriber on a Y-o-Y basis rose six-fold to more
than 4.6GB during Q2FY18 from 772 MB.

Brokerage firm CLSA in a report in November said, “Jio’s launch has triggered
an exponential growth in data usage with Bharti also seeing a 4x jump in per-
subscriber usage to over 4GB/month. While Bharti lost data subscribers when
Jio was free, since April 2017, when Jio turned pay, Bharti has added over 8
million data subscribers and 14 million 3G/4G data subscribers.” Another
factor spurring data consumption is the growth in smart phone users. India

Page | 50
has around 400 million smart phone users, which is expected to grow in the
near and medium term, as more consumers upgrade to smart phones. Analysts
expect more than 50% of the country’s population using smart phones in the
next two-three years. According to CLSA projections, feature phone shipments
in FY19 will remain flat at 137 million compared to FY18, whereas smart phone
shipments will grow by more than 7% to 131 million during the same period.
According to research firm analysis, India overtook the US as the world’s
second-largest smart phone market after China, with shipments touching a
record 40 million units during October-December 2017.

While the story of India’s experiments with data is bright, the voice segment is
still a sore point for telecom operators. Voice revenue and ARPUs have been
weakening consistently as incumbents diluted their bundled plans to cater to a
larger base of customers. Voice revenues have been declining consistently since
the last five quarters. Revenue during Q2FY18 stood at `17,000 crore, a
quarter-on-quarter decline of 13%. The year-on-year drop was steeper at 34%

Page | 51
from Rs 25,700 crore. The decline in voice revenue in Q2FY18 against Q1FY18
was more compared to that in Q1FY18 compared to Q4FY17 as July-
September is a seasonally weak quarter. Also, operators absorbed the increase
in indirect taxes due to a GST rate of 18% against a service tax of 15% as
intense competition prevented any pass-through of the hike to subscribers.

The decline is also more pronounced owing to the intensifying competition in

the market. BNP Paribas said that even though subscriber growth is returning
for Bharti Airtel, Vodafone India and Idea Cellular on the back of the exit of
weaker operators, the incumbents have become more aggressive reducing their
price premium over Jio – to around 10%. The brokerage in the same report in
November said that it expects Arup pressure to continue in Q3FY18 given the
interconnect usage charge (IUC) rate cut, acquisition of low-end customers and
aggressive new plans. “However, we expect recovery starting Q4FY18 due to
industry consolidation, tariff increases by Jio, unsustainable tariff levels and
rising data usage,” the report added.

Page | 52
4.4 Stating about consumer satisfaction by a comparative
study of Jio with other brands like: Airtel, Vodafone and Idea
The profile of the respondents based on Gender, Age, Educational
Qualifications and Occupation are presented in Table below:

Age, Educational Qualifications and Occupation

Serial
number Particulars Frequency Percentage

1. Gender

Male 61 61%

Female 39 39%

2. Age in Years

15 - 25 81 81%

26 - 35 14 14%

36 - 45 3 3%

46 - 60 2 2%

3. Educational
Qualification

Intermediate 5 5%

Graduate 50 50%

Post
graduate 44 44%

Other 1 1%

4. Occupation

Student 72 72%

Employee 20 20%

Self Employed 4 4%

Page | 53
 Others 4 4%

The gender of the customer is an important variable which is likely to

influence the level of customer satisfaction, customers likelihood towards a
product may change with respective to the gender. Majority of the
respondents are Male customers contributing to 61% whereas Female
customers contribute to 39% of total respondents.

The age group of the customers plays an important role on the level of
satisfaction. The level of customer satisfaction may tend to vary with the
variation in the age of the customer. Majority of the respondents are in the
age group of 15 to 25 years contributing to 81% of the total respondents.

Education level of the customers is another important factor that determines

awareness, preferences and level of customer satisfaction. It is also believed
that the level of awareness differs based on the level of education of the
customer which influences the level of customer satisfaction. From the data
in the table shows that majority of the respondents are Graduates
contributing to 50% followed by Post graduate contributing to 44%.

Occupations wise classification shows that majority of the respondents are

students contributing to 72%, followed by 20% of employees.

In order to understand the customer satisfaction towards JIO

telecommunication service provider, battery of statements related to the
services of telecommunication service provider were asked to the
respondents. The responses were analyzed using Likert Five point scale with
Highly Satisfied, Satisfied, Neutral, Not satisfied, and highly not satisfied.

With regard to customer satisfaction towards Internet services majority of the

respondents contributing to 88% of the total respondents are satisfied. 66%

Page | 54
of the respondents are satisfied with the call clarity followed by 26% who are
neutral in their opinion with regard to call clarity. In terms of SMS facility
71% of the total respondents are satisfied. 57% of the respondents expressed
their satisfaction with signal. With regard to customer care services provided
by JIO only 41% of respondents expressed that they are satisfied, whereas
48% of respondents are neutral in their opinion with regard to customer care
services provided by the JIO service provider 87% of the total respondents
expressed their satisfaction with the services. Overall it can be concluded
from the data presented in the above table that majority of the total
respondents are satisfied with the services provided by JIO.

Table 2

Customer Satisfaction- Overall Analysis

Highly
S Particulars Satisfied Satisfied Neutral Dissatisfied Highly

Dissatisfie
n d

Satisfaction
towards internet
service provided
1 by Jio 50 38 9 3 0

Page | 55
2 Satisfaction 24 42 26 5 3

towards

Call clarity

3 Satisfaction 33 38 22 5 2

towards

SMS

services

4 Satisfaction 19 38 38 4 1

towards

availability

ofSignal

5 Satisfaction 15 26 48 9 2

towards

Customer

care

Services

6 Satisfaction 26 41 30 3 0

with

roaming

Over
7 all 83 4 13 0 0

satisfaction

with JIO

services

Page | 56
 The data reveals that mean value of the customer satisfaction of the
respondents is ranging from 1.30 to 2.57. The standard deviation is
ranging from 0.69 to 0.97. More variability in the opinion of the
respondents is noticed in the dimension satisfaction with regard to call
clarity and satisfaction with regard to SMS services and less variability is
notices in the dimension overall satisfaction with the services provided by
JIO.

Which operator service do you use?

As the questionnaire has been filled up by the Jio users, 100 % people use Jio.
While, in addition to that People use dual sim card phones and they use Airtel,
Vodafone, idea and other networks as well. Out of 100 respondents 73 people
have dual sim phones. Out of 73 people 27 prefer Airtel, 23 people prefer
Vodafone, and 13 people prefer Idea while 10 people ticked on others.

Which feature of Jio convinced you to use?

Feature % of Respondents No. of Response

Connectivity 22 22
Scheme 58 58
Advertisements 12 12
Goodwill 8 8

Jio is offering 2 GB data per day in just Rs. 399 for 84 days. This is the most
pocket friendly offer for all the strata of society. The sole reason for switching
from Jio to other brand is the offers and schemes they are offering. Recently
Paytm is giving Rs. 50 cash back to the prime members of Jio.

And if we talk about advertisements, the brand is endorsed by Shahrukh khan

as well as Amitabh Bachchan.

Page | 57
SWOT Analysis
Strengths
1. Reliance Industries is strong parent company backed up Mukesh Ambani.
2. Company has begun with 4G service with no tariff. It has strong financial
capability to stand with initial losses.
3. Strong brand image due to excellent marketing and advertising strategy
4. It has brand ambassadors like Shahrukh Khan and Amitabh Bachchan who
has deep influence on masses.
5. It has technological advantages i.e. 4G LTE services with VoLTE.
6. It has built strong national network with investment of around $20 billion.
7. Its network covers all the 22 circles across the India.
8. Jio apps are offering wide range of features like movies, shopping, chat,
cloud, games etc. under one umbrella.
9. Jio compact with affordable LYF smart phones would increase the brand.

Weaknesses
1. Advertisement showing PM picture would raise new controversies.
2. Mobile number portability is not very smooth and Jio is expected large
number of customers would migrate from existing service providers.
3. Company has to depend upon data consumption for profitability due to
making voice calling free.
4. Jio made late entry would make difficult to increase market share.
5. Earlier company’s telecom venture CDMA was unsuccessful.
6. Company has inadequate fide optic capacity.

Page | 58
Opportunities
1. The company can offer telecom services at competitive rates.
2. India has huge market for telecom services because of large scale availability
of smart phones.
3. At international market company has huge opportunity in many developing
countries.
4. Due to technological edge company can also promote exclusive services to
consumers.
5. Company reliance communication has a huge infrastructure over the
country.
6. Lower data tariff plans may further attract advertisement industry with
option of e-marketing.

Threats
1. People would not like to use Jio after free services are over.
2. The initial phase of rapid increase it is very difficult to maintain a large
consumer base to cross breakeven point.
3. Existing strong competitors having broader and loyal consumer base would
tough to compete.

Page | 59
Industry Analysis Using Michael Porter’s Five Force
Model

The present scenario in the Indian telecom sector can be better analyzed by
suing Michael Porter’s Five Force Model.

Threat of New Entrant - The Reliance announcement of its free offers creates
drastic changes not only on its rivalry competitors but also on subscribers,
power of suppliers, and power of buyers and threat of substitutes. Here we can
apply the Porter’ prophets in Indian telecom market. Major market leaders
Airtel, Idea and some others ready to dig new strategies to attack and protect
by themselves. It is a time for structural alters exists. As the Jio works only
with 4G mobile, the impact of Jio on the competition in the segment of feature
phone users is absent. However, Jio has come up with a device that upgrades
3G mobile to function 4G services. Jio competes even in the 3G mobile user
segment.

Competitive rivalry
Customers’ low switching cost intensifies the competition in the industry. Price
sensitivity of customers also adds to this. Telecom sector in India is almost
saturated. Almost every household possess a mobile network. In this case,
every rival is fighting for the same share. There is no market left for new
entrants. New entrant Jio must get significant share only from the competitors.
This maximizes the rivalry in the industry. Exit barriers are also found in the
industry. Hence, the players must fight against major competitor till the end.

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Threat of substitutes
Hardly there are any substitute products for mobile services in the industry.
Hence the impact of substitutes is insignificant in this case.

Bargaining power of buyers

Bargaining power of buyers will be a major force in the industry. Customers
are exercising high bargaining capacity. The reasons for high bargaining power
of buyers would be switching cost are very low. Customers can switch their
service through the option ‘port’ without changing their number. Customers in
this industry are observed to be price sensitive. Therefore, customers expect
superior quality service at lower cost. This made mobile giants Airtel and Idea
to slash their tariff nearly to 40%. Eventually it adversely affects industry
profitability. Also become threat to the new entrant.

Bargaining power of suppliers

Being supplier of mobile services such as messaging, calling, data and other
value added services, the players have less bargaining power with the
customers. This forces the players to offer better services at reasonable price.
The table 1: Shows the current market share of mobile service operators in
India as on 16th February 2017.

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 Chapter-5
Summary
Jio has been a game-changer, if not for the customers, then at least for the
telecom industry. Thanks to its predatory pricing, all the big players (Airtel,
Idea, and Vodafone) in the industry have been dragged into a price-war that the
industry had avoided thus far. As a direct result of this the Rs 26,000 crore
mobile virtual network operator (MVNO) markets can take a serious hit,
according to analysts and industry experts.

The telecom sector has a debt of Rs 4.42 lakh crore, while its revenue is only
about Rs 2.11 lakh crore. While there are various factors that have led to poor
financial health of the industry (low revenue, high taxes, huge investments on
spectrum etc), it is the short-sightedness of TRAI that has been the cause of
concern.

Jio may look like a success story at first glance, but it is only the happy-go-
lucky first act of a horror movie. The company, which itself is not managing to
make a dent big enough, is perhaps going to become the one that will take
everyone down along with itself. Jio’s tactics need to come under some kind of
check lest we all happily choose to suffer in what is slowly turning into a sickly
industry.

The company that captured a market of 120 million customers in a matter of

months is now is facing the repercussions of trying to win loyalty by
offering freebies. What began with free data and calls for customers slowly
turned into cheaper Prime offers and has now come to cash-backs. Despite all
the luring offers, things are proving difficult for them. The decision to allow
Reliance Jio to offer free promotional tariff for more than 200 days (much more
than the usual 90-day limit) is what will be looked back upon as a big regret.

Page | 62
 Conclusion
Reliance Jio’s free introducing offer creates lot of radical and unexpected
changes in consumer’s behaviors and competitor’s strategies. The impact of
this new entrant affects equilibrium in the mobile industry and makes rivals
vulnerable that they resort to mergers and acquisitions in Indian mobile
network providers. Since the exit barriers are present in the industry, they
cannot get out of the industry. It will be too difficult for small players in the
industry to make a significant market share. The only option to become
stronger to compete with Jio is to make strategic alliances with other
competitors The major giants in the industry viz, Airtel and Idea strategically
responding in a similar way. To strengthen themselves in the industry, Airtel
and Idea have acquired Telenor and Vodafone respectively.

This study has concluded on the growing consumer satisfaction towards

Reliance Jio. The customers of Reliance Jio have already crossed 130 million,
and the growing demand will lead the company towards success. The factors
responsible for customer satisfaction towards Jio have been identified through
the study. The reliability, performance expectancy and other factors have
enabled the presence of Reliance Jio in the mind of customers. Further, the
future study can be performed on the factors using CFA for academic
purposes. The findings can be used by Jio for their future strategies.

A good business is the one which is win-win for all parties involved, and Jio is
doing it pretty well. Data is the oxygen of digital life. Jio is more than just a
business. It is a commitment to enrich the life of every Indians said by Mukesh
Ambani. Jio is aimed at realizing Digital India dream of our prime minister.

Reliance Jio’s mega entry generates lot of drastic and unanticipated changes in
consumer’s behaviors. The entrant impacts the equilibrium and jolt the
telecom industry. It leads to an uncertainty, the big services provider’s talks
about mergers and acquisitions. Due to exiting barriers, they will not get of the
industry but it becomes too difficult to survive for small players. The main
objective of Reliance Jio is increasing their consumer base by providing high
speed internet at nominal rates. The company would have generated a
significant market share in next 3-5 years. In end reliance Jio has successfully

Page | 63
hit the target market and has deep pockets to invest but has threat to
competition and technology.

If the researcher talks about customer satisfaction then that majority of the
respondents are satisfied with the services provided by the JIO
telecommunication service provider. Majority of the total respondents are
highly satisfied with the Internet facilities provided by JIO. From the analysis it
can be observed that the customer are not that much satisfied with the
customer care services provided by JIO. It can be suggested that the company
need to focus more on the customer care services, responding to the customer’s
issues and concerns and providing solutions.

Page | 64
 Suggestion
On the basis of my observations data and information, I submit certain useful
recommendations to make Communication system of Reliance very effective
and customer centric. Some of the worthy suggestions are given as under:
► Reliance Communication doesn’t have its own network since it uses BSNL
networks. It should rely on its own network. It will give strength & wide
coverage to Reliance Communication services.
►It is suggested that Reliance Communication should develop innovative
Communication services with in depth research development and continue
improvement in the quality of services.
►They should resort to TQM philosophy with good corporate governance and
transparency in its policies, programmes and strategies.
►It is further suggested that Reliance Communication, which enjoys highest
market share, should diversify its services and further diversify the models and
the systems as suggested by the respondent.
►The researcher suggests that Reliance Communication should develop their
competitive strength to meet the challenges and threats of global corporations
in the Communication business.
►It is suggested that Reliance Communication should develop relationship
marketing so as to know the real needs of the customers & should incorporate
customer's suggestions.
►The researcher further suggests that Reliance Communication should
develop bench marks as standards for providing better customer services.
►It is further suggested there should be continuous revision in the pricing of
Communication services.
►It is again suggested that they should take into consideration environmental
factors in providing consumer services and determining prices.
►It is again recommended that Reliance Communication should develop
quality circles in different functional areas of the organisations so the quality
may be improved and suggestion should be obtained from the people.
►Finally, the researcher would like to suggest that Reliance Communication
should develop product research, product planning, strategic planning and
Research & Development activities, so they would come up to the global culture
and should compete with its competitors internally.

Page | 65
Annexure

Page | 66
Page | 67
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