RELIANCE JIO EFFECT ON TELECOM INDUSTRY

Ever since the launch of Jio services on 5th of September in India, the telecom industry has changed a lot. Recent offers like Free calls and cheaper Internet packs by the contemporary companies is just the beginning and in India, this trend gonna stay forever as Reliance has promised that their Voice call and Roaming services are gonna remain free for lifetime.

The effect of Jio’s entry into telecom business is very positive for Customers but it’s really bad for the other companies because they are losing customers.

If we go with the facts then more than 1000 new Customers are adopting Jio every minute or 6 lakh every day. Jio has already reached 50 million customer mark in 83 days which is a record in itself even companies like Facebook and What’s app are far behind from Jio in this record. It takes 12 years to Airtel and 13 years to Idea and Vodafone to reach 50 million Customers mark which Jio has crossed in 83 days only. Well the strategy of Jio is pretty simple to form a large customer base from which they gonna earn later and right now their service is not as smooth as other Companies are providing but this gonna improve in coming year and before 31st march they gonna break all speed barriers they had put on Net speed so that these Customers don’t run away. But the main question is what is going to happen with other Companies. Airtel, Idea and Reliance Communications has Collectively lost 22,500 Crore market Capitalization in a single day just after the announcement of Jio. Some experts say that this aggressive strategy of Reliance Jio will kill small telecom companies like Aircel, Telenor India and Tata Services if not exit which completely depended upon Cheaper Call rate service provided by them. This is not a new thing done by Reliance, back in 2002 when Mukesh Ambani was taking care of telecom business under his guidance Reliance telecom make a grand entry by providing CDMA Sims with handset that provides free night calls also shake that whole industry for a long time which revolutionized the industry as call rates decrease a lot after that. But after the death of Dhirubhai Ambani, the telecom division goes into the hand of Anil Ambani which fails to cause same magic as Mukesh does and they also have a policy according to which Mukesh can’t open a telecom company until 2010 because Anil Ambani knows the special interest of Mukesh Ambani for the telecom industry. Just after the ending of “No competition policy” Mukesh Ambani bought 96% stake of Infotel Broadband Services Limited in June 2010 for 4,800 crores which had won the BWA spectrum in all 22 telecom circles in the spectrum auctions of that year. JIO now owns spectrum in 1800-MHz band in 18 circles, and also owns pan-India 850-MHz and 2,300-MHz spectrum. In order to further strengthen its spectrum portfolio, JIO also entered into a spectrum-sharing deal with Mr. Anil Ambani’s Reliance Communications for the 850-MHz band across seven circles.

Before the announcement of Demonetization, Jio was the main topic of gossip and similarly both forces common people to form lines and Strangely both had caused huge loss to the economy. Jio to the telecom industry and Demonetization to the whole economy although both gonna give huge benefit in long run. First Jio and after that Demonetization had literally killed the telecom companies now they are on life support. In the 4G sector, Jio has already become the biggest player with more than 50 Million Customers while contemporaries like Airtel has 10 Million Customers which was first to release 4G Service in India back in 2014. Airtel is still the biggest telecom company with more than 24.07% market covered with 262.67 million Customers as of October but the fact is Companies like Airtel earn around 70% from Calls and messages which Jio is giving free of Cost(only Calls). This thing proves that Jio is a big danger for the Contemporary Companies if they want to Compete then they also have to play in the same way as Jio is playing, If Companies like Airtel had previously estimated the plans of Jio then they don’t take this much time in launching services like Free calling from Airtel to Airtel because whatever customers Jio is attracting is coming from other companies mainly. Jio is not only attracting new mobile users but mostly it’s breaking the Customers of big players like Airtel.

If Airtel also Start giving free Internet like Jio then who gonna ask for Jio because Airtel’s Net is really awesome but right now very costly and what if they start this Free Service right after Jio’s ending then it will be a huge blow to Jio and Reliance who had spend a lot in telecom already but it’s not possible for a Company like Airtel whom major source of Income comes from telecom business only unlike Reliance.