Reliance Industries Chairman and Managing Director Mukesh Ambani is on Tuesday expected to make a major announcement on the future plans of Reliance Jio, the telecom arm that has shaken the sector over the past six months.
Ambani at a recent interactive session at the Nasscom India Leadership Forum 2017 said the company has crossed 100 million subscriber mark in a very short span of time.
"When we started Jio we set a target of 100 million customers in shortest time. Even we didn't imagine we will do it in months. Aadhaar enabled us to acquire a million customers a day, which is unheard of in the industry," Ambani said.The quick rise of the company is forcing the debt-ridden sector to transform and even move towards consolidation. While Vodafone India is in talks with Idea for a possible merger, there are reports that Tata Teleservices and MTS may be looking to merge with Reliance Communication-Aircel combine.
If these deals indeed happen, it will change the pecking order in the sector, with Airtel leading the pack and Vodafone-Idea and RCom-Aircel-Tata-MTS following.
However, the merger of Tata-MTS with RCom Aircel seems a tall order given the financial position and the litigations the companies are involved.
Whatever its impact on the sector, one thing is for sure: the company has indeed disrupted the market.
"Jio was conceived at a time when the world was fast digitising. What the Jio platform offers is partner with the next generation to solve problems for India to make sure our industries are more productive," Ambani said at the Nasscom event.
"To my mind, data is the new natural resource. In that sense, India is blessed with 1.3 billion people, for it to have real value it has to be processed into intelligence. Data is the new oil and its benefit is immense to society. India with its young population will have a competitive advantage," he added.
An IANS report recently said the balance-sheet of Bharti Airtel, Idea Cellular and Reliance Communications were under major pressure in the third quarter (October-December) as Jio's entry continued to impact their businesses and strategies.
"Margin pressure on telcos will continue as long the free data offer from Reliance Jio continues. As and when Reliance Jio decides to withdraw its offer and start charging for its data services, then it will be a different matter," Arpita Pal Agrawal, partner and leader, Telecom Industry Practice, PricewaterhouseCoopers India, told IANS.
"Customers will then compare telco offerings on parameters such as price points, throughput speed, tariff bundles, service experience to decide about their preferred operator option," she added.
As announced earlier, Reliance Jio plans to offer free data to its customers till March 2017.
Bharti Airtel's net profit for the third quarter of 2016-17 dropped by 55 percent while Idea Cellular reported a loss of Rs 478.9 crore for the same quarter. Reliance Communications too posted a net loss of Rs 531 crore in the quarter. Vodafone India, the other big telecom operator, is not yet listed on any Indian bourse.
Mahesh Uppal, director, Com First, a telecom consultancy firm, also said there is no doubt that the revenue drop in the third quarter was a direct consequence of Reliance Jio's aggressive free data offers.
"Incumbent companies, like Airtel and Idea, are being forced to match the prices to remain competitive. The cut-throat pricing is likely to continue since Reliance Jio would want to use it to acquire a decent market share," Uppal told IANS.
"India is a very price sensitive market; any such offering tends to be disruptive. Incumbent operators need to implement strategies to retain their high-value customers," Rishi Tejpal, Principal Research Analyst for Telecom Business Strategy at Gartner, told IANS.
"Operators need to implement data-oriented pricing strategies. Jio's free voice service with free national roaming is a compelling offering and incumbents need to match their offerings to remain competitive," he added.
Published Date: Feb 21, 2017 02:23 pm | Updated Date: Feb 21, 2017 02:23 pm