Jio: The Rising Giant
The year so far hasn’t been the best for most of the companies with the COVID-19 virus bringing everything to a halt but there is one company which despite such hurdles has been able to outperform its competitors and continue making the great leap towards development in the telecom sector with the development for 5G solution. Yes, it’s none other than Reliance Jio Infocomm Limited which continues to challenge the veterans of the telecom sector while setting new milestones.
Jio was launched by Mukesh Ambani in 2016 and since then it has revolutionized the telecom sector with its low-cost plans which took the citizens by shock and the demand for jio since then has been rising. Every citizen rushed to get a jio sim after the initial launch which promised a certain GB of data free at 4G speeds which no other player in the sector could afford to offer even though they had been in this sector for years. Even though the network coverage was still in the works it provided a good amount of data to every user and apart from that the plans it offered were affordable by every citizen of the country and the plan had the potential to last long enough unlike the other offered at that time.
Apart from just providing mobile broadband services, Jio had a lot in store for the country thereby showing the potential it had to bring about certain changes in the telecom sector. In 2019 JioFiber was launched which aimed at securing a broadband connection to every household in the country. The next product launched was the Jio TV which enabled the customers to view their favourite channels on their phone and also access various VoD and OTT from the across the world in one single app.
There are certain things which cannot be caught with the naked eye and Jio DTH is one of them, Jio started with its set-top box service which promised a good entertainment and gaming experience which was unparalleled. But the entertainment provided is made possible by receiving TV cable signals from Local Cable Operators and hence ensuring that they stay in business. This shows the support jio provides to small and local businesses which the other telecom giants have failed to provide over the years.
The break-even attained by jio just a few years after its launch was a surprise for everyone in the street. The net income from the fiscal year 2019 was calculated to be $510 Million. As of the last quarter, the internet user base in India has risen by 3.4% and the market share of jio alone stands at 53.76% in the wireless internet segment which just shows the dominance of jio in the telecom sector over the last couple of years since its launch in 2016. The revenue earned by jio in the 2nd quarter of the fiscal year 2020–2021 stands out to be $ 3 billion.
When jio was launched the telecom sector was ruled by giants like Airtel and Vodafone with the price of the plans reaching sky-high at one point just a few GB of the data. But jio was determined to change it all. It gave a tough competition to the veterans in every field and proved to be victorious which in turn led them to take certain actions which were pivotal for their survival in the telecom sector.
Jio’s rise in the telecom sector seemed unstoppable as a result of which the already existing companies in the field could not manage to put up with the aggressive approach of jio which resulted in the loss in market share for companies like Airtel, Vodafone and Idea.
The loss in market share, fall in stock prices lead all the companies to come up with various plans to resurge in the market. Some of them were unique while some of them followed right in Jio’s path.
The end of 2017 saw a resurgence for Airtel with a fall in the loss of market share to jio and a surge in its stock price due to its operations in Africa and addition of subscribers which has proven to be a silver lining. Airtel confirmed that the users leaving the network dropped from 4.1% to 3.6% in the October-December period due to pressures. The Indian market makes up for 78% of the overall revenue of airtel the company had nearly 274 million mobile subscribers, up by 2.9%. Airtel added 5.0mn MBB or 3G/4G subs in 4Q, which is a positive surprise which came at the cost of its reduction in tariff which implied a lower revenue. Well, what this implies is that Airtel is willing to tactically match Jio’s aggressive price strategy to retain their core customers and revenue share in the market.
To cope with the challenge of Jio, Vodafone and Idea decided to merge their operations to cope up with the loss and reduce the operational cost. What the merger did was it broadened the customer base and increased the resources available thereby improving the VoLTe facility and increasing the efficiency of prolong voice calls. But the question remains will this be enough to counter jio? The problem still lies with the fact that even though with the merger they still don’t have the capital required to invest into research and development as compared jio which has got deep pockets and can spend a good amount when it comes to the development of the product, improvement of services, advertising and much more which in the long run does play an important role.
The one thing that most people have overlooked in the past few years is the increase in options for the customers. The end goal is to satisfy the customers and make sure they are happy. Before the launch of Jio, the customers didn’t have many options available when it came to the selection of plans, most of them were overpriced and didn’t provide enough data or talk time. But the aggressive approach adopted by Jio has forced other companies to bring their rates down to retain their customer base which has played right into the hands of the customer. Doing the smart thing with the availability of dual sim phones, the customer has taken the advantage of the situation using two sims of the different companies which enables him to get the best out of both companies whichever he prefers to use.
Many believe that with the way jio has been going on the and the plans it has or is going to execute in the future it will be leading to the creation of a monopoly in the telecom sector with its rivals running out of business and shutting down operations in several parts of the country. Many believe that it is high time that TRAI interfered and stopped Jio. But it has been seen that during the case of the summer offer where the particular didn’t meet with the TRAI regulations. Instead of bringing in the TRAI Act which allows the regulatory body to prohibit the company from carrying out certain acts. But instead the TRAI “advised” Jio to stop it’s summer offers which was seemed to be very lenient on its part.
But all of this doesn’t seem to stop or deviate Jio from executing its plan to perfection. Currently, Jio is leading in the development of 5G solution which is scheduled to release in 2021. The effect was this news was many foreign companies started investing in the telecom company for some percentage of stake in the company which further increased the deep pockets of the company already present and thereby increasing the availability of resources it can dispose of as and when required. As a surprise in April 2020 Facebook invested $6.1 billion, In May 2020, private equity firm Silver Lake Partners invested $790 million, In June 2020, Emirati sovereign fund Mubadala invested $1.3 billion, In July 2020, Another United States’ Tech Giant company Qualcomm invested $7.3 billion in Jio followed by Google investing $4.7 billion in Jio platforms.
What we are witnessing right now is a crucial time which will define the future of the telecom sector, with the massive investment being poured into Jio to create a 5G solution in which if it deems to be successful then it would have made the gap between the competitors and Jio wider. The wider the gap becomes the more difficult it will for companies to survive in the telecom sector as a single company will be having enough potential to engulf the entire sector. Which leads us to question the motives behind the ventures undertaken by Jio. In the long run, if the telecom sector does turn out to be a monopoly with Jio in firm control of the sector would they bring about drastic changes which can affect every customer? After all, Jio does belong to a capitalist who will surely look to fulfil his ambitions before thinking about others. Or is this the time when the TRAI being the regulatory body come in and play its role by introducing certain regulations which ensure a level playing field and maintaining a strict vigilance over all the competitors present? Only time will tell us.
