Reliance Jio Turns Two: Journey Of The Fastest Growing Telecom Brand In India
September 5 2018 marks two years since the launch of the brand that shook the telecom industry in India.
With its launch, Jio did a few things very differently. First, it focused on a pure play 4G network. While the incumbents were slow to upgrade their networks, Jio had no such issues. Remember, this was at a time while others were still focusing their efforts on 3G. Access to high speed, affordable data has acted as the tide which lifts all boats. Suddenly, there has been a race to create compelling use cases from startups and industry veterans alike. This has been nothing but a boon for the Indian consumer who now has a range of services to choose from — from video streaming apps (on demand, and live TV), to video calling and gaming.
The simplicity, speed, and affordability of Jio’s plans ended up forcing Airtel, Vodafone, and Idea to follow suit. While the game of cat and mouse continues, Jio has promised a minimum 20% additional value to whatever comparable plans their rivals offer. As a result, the Indian mobile consumer has also changed drastically from what she was before. Today, downloads don’t necessarily wait for WiFi connectivity. Piracy is down as people are choosing the convenience of streaming from their prefered service provider while on the go.
Over a short period of time Jio has become India’s third-largest telecom operator by revenue market share, dislodging Kumar Birla-led Idea Cellular and closing in on Vodafone India as its aggressive pricing strategy left rivals struggling. Just 19 months since starting services, Mukesh Ambani-controlled Jio’s revenue market share widened to almost 20% as of March end, according to financial data put out by the Telecom Regulatory Authority of India (TRAI).
Biggest brand in the market at present
According to announcements at Reliance’s latest annual general meeting, Jio has amassed 215 million users within 22 months of their launch — a record that no technology company has been able to achieve anywhere in the world. This has made Jio the world’s largest mobile data network. According to company data, video consumption on the network has also grown from 165 crore hours of video per month to more than 340 crore hours per month. The high growth rate remains unmatched by peers in the industry.
Left giants like Airtel and Vodafone shaken to the core
Airtel and Vodafone have been up in arms. First the complains to TRAI and the TDSAT then the race to the bottom in terms of tariffs. The top 7 Indian telecom companies (Bharti Airtel, Idea Cellular, Vodafone India, Reliance Jio, Reliance Communications, Tata Teleservices and Tata Teleservices Maharashtra) have witnessed a 19% rise in their total debt burden in financial year 2016–17; from $ 46.5 bn in FY16 to $ 55.3 bn in FY17. The sector’s cumulative debt has mounted to almost $ 76.9 bn, with revenues to the tune of just $ 27.6 bn. To add to their woes, their market share have also been rapidly declining.
Led to consolidation in the Indian telecom sector
The previous rounds of consolidation in the telecom sector in India can be traced back to 2001–04, which oversaw the exit of various regional players such as Koshika Telecom, Escotel etc. along with the advent of pan-India operators.
Airtel’s cash-free and debt-free acquisition of the consumer mobile business of Tata Teleservices along with Tata Teleservices Maharashtra, is the latest in a frenzied outburst of consolidation activity being witnessed by the Indian telecom sector. The stage is set for a three-pronged clash of the titans, namely Reliance Jio, Bharti Airtel and the Vodafone-Idea merged identity, with state-owned BSNL (Bharat Sanchar Nigam Limited) is a distant albeit significant fourth. At stake is the world’s second largest telecommunications market (by subscriber base) cum the world’s third-largest internet user base.
Shook up the device market
While the success of the 4G network is well known, what’s less known, but probably more impactful is their move to make 4G devices accessible at much lower price points than conventional wisdom thought possible. First, with their LYF brand of devices, Jio inspired mainstream manufacturers like Motorola, Micromax and Vivo to explore quality devices in the sub 15k market. Then, with the JioPhone, it gave us a device that forced us to come up with a new category in which to place it — Fusion phone. It seamlessly blended important smarts in a form factor that was available for as low as Rs. 500. This has enabled it to gain a market share of 47% in the non smartphone segment.
Beyond 4G
Next on the agenda is increasing the broadband customer base in the country. To this end, Reliance Jio has begun the rollout of Jio GigaFiber — a fiber optic service promising speeds of up to 1 Gbps. This is expected to catalyse the adoption of more IoT devices and making homes and businesses smarter. Just like the content ecosystem was transformed by the launch of the 4G network, we can look forward to the transformation of the home appliance market and the growth of internet enabled devices. From ACs which turn on and off based on where you are to security systems which send you alerts in case of suspicious activities. The world that seemed fantastical in The Jetsons is not too far away.
Reliance Jio’s growth story has been revolutionary. Not only did the company rapidly garner market share, it also increased internet as well as smartphone penetration in the country. The headwinds facing the telecom sector in India seem to have only just begun. It seems like it will be a while before the flurry of activity settles down. In the coming decades, Jio is poised to be the most consequential company to come out of India.
