RJio Strikes Again: Telcos' Fight Is Consumers' Gain

by CXOtoday News Desk    Apr 03, 2017

telcos

After creating revolution with free voice calls and data services in India, Reliance Jio Infocomm, surprised users again when the telco announced on March 31, a new offer wherein, customers will not have to pay until July at least. Reliance Jio’s Summer Surprise offer that allows users to sign up for Jio Prime membership till April 15, an extension of 15 days over the original Jio Prime deadline invoked strong reactions among other telecom operators who announced several offers post the With Jio Summer Surprise. RJio’s rivals are coming up with more attractive products and services, going through greater consolidation, campaigning against one another and even taking matters to the court. The end result: Consumers are now spoilt for choice with offers and more offers.

Immediately after RJio’s annoucement, Idea Cellular launched 1GB per day pack for its postpaid customers for Rs 300 to compete with Jio’s Rs 303. The 4G handset users will get 1GB per day while non-4G users will be given 3GB for the month.

The company said that this offer has been discounted for the first three months of subscription wherein subscribers will get to avail of the offer for Rs 50 on base rental plans of Rs 349 to Rs 498.This discount the company said will be available till April 30 itself.

Vodafone also announced the launch of its 24 GB ‘gift’ data pack to its post-paid subscribers and the users will get the data in a monthly instalment of 8GB over the period of three months. Airtel too announced that it would provide 30GB free 4G data for three months.

Bharat Sanchar Nigam also started offering 10GB data per day packs for Rs 249 per month. Apart from this, users will also get unlimited calling from 9 pm-7 am with an internet speed of 2MB per second.

“The new Reliance Jio Summer Surprise offer will continue to bleed the industry,” cellular operators’ body COAI said in a statement, adding that the impact may even extend to banks and other institutions that have large exposure to the telecom industry.

Based on some estimates, RJio retained about 60% of total users as on 31 March. This is great news from Jio’s perspective, but sad for incumbents. As Reliance Jio mentioned that it had a paid subscriber base of 72 million, making it the largest mobile broadband services company in the country. Bharti Airtel Ltd had a mobile broadband subscriber base of 37.7 million in December 2016, or about 14% of its total mobile services customer base.

Reliance Jio’s entry into the India market with a bang in September last year disrupted the entire industry, leading to severe battle between telecom players that are now forced to challenge Reliance Jio’s growing subscriber base to survive and sustain. 

At the same time, a number of deals over the past few months further suggest that the sector will be ruled only by a handful of large telecom operators, compelling the weaker telcos to exit altogether. Analyst firm Fitch suggested the Indian telecom industry should continue to consolidate and it expects five to six operators to emerge from the shake-out. “Unprofitable telcos, such as Telenor and Tata, could exit, given that their businesses will struggle to compete and they are now able to monetise their most valuable assets — their under-utilized spectrum,” the note said.

COAI said that while the industry moving towards lower pricing is good for consumers, the larger question of whether such pricing conforms to tariff regulations is a matter that needs to be settled by the courts and the telecom tribunal.

According to Rajan S Mathews, Director General, COAI, “The need of the hour for consumers is, a predictable, stable, long term, regulatory and policy environment, to ensure the financial health of TSPs and a conducive environment for continued investments for a fully connected and digitally empowered India.”

Prashant Singhal, Global Telecom Leader EY commented in a recent note, “Market consolidation is positive for the telecoms sector and the consumer. As operators grapple with excessive competition and pressurised margins, consolidation will help bring synergies and unlock greater cost efficiencies.

The consumers will also benefit as the telco strategy will now pivot on innovation to offer value in terms of quality of service and content. Now that the sector is inching towards its ideal state, it is imperative for the Government to expedite approvals for the industry to realise the benefits.”