Is Jio Platforms Creating India’s Facebook Moment?
Image Courtesy: Business Insider
Monopolies are inherently bad – for the consumer, for the economy, and in the long term, even for the country. Monopolies restrict choices, force consumers to ‘accept’ what is given, inhibit startups and throttle innovation. India has seen such monopolies in the past, during the days of the license permit, when several enterprises, making everything from automobiles to telephones and selling insurance, ruled the roost.
How many of us remember the Ambassador car or the Bajaj scooter, both benefiting from the aversion to innovation that characterised successive governments and led us to situations of no choice but to wait our turn or buy in the black market.
Post 1991-92, we have also seen how, when the monopolies are destroyed, suddenly there was a surge in availability of consumer choices. Investment flows, the market expands and both the citizen and the state reap higher benefits.
In a rather perverse way, the Indian telecom industry may be headed towards a monopoly once again. From a multiplayer industry, the market is now coalescing into a duopoly and experts predict that one player out of the two, may be so far ahead in the game that in the next few years (read two to three, not more), the two-player market will turn into a single 700-pound gorilla that would straddle the entire telecom market in India.
That one single player is undoubtedly Reliance Jio Mart, which ironically is as much a telco as it is an eCommerce player today. In the four years since Jio entered the market, the company has grown at a blistering pace adding consumers and investors. According to official TRAI estimates Jio has more subscribers than either of its competitors and currently holds a third of the market.
Airtel is not far behind accounting for around 28% of the market and Vodafone with about 27%. One could argue that this does not amount to any sort of monopoly. But, that didn’t stop R-Jio from voicing its concern over new schemes that the other two launched recently,
Now consider another set of numbers – Reliance Jio was the ONLY player amongst the three majors to add subscribers into its fold in March 20 – a whopping 46 lakh subscribers entered the Jio family, while Airtel and Vodafone actually LOST subscribers around 12 lakh for Airtel and a massive 63 lakh for Vodafone.
During the Covid-19 pandemic, Jio has moved aggressively launching JioMeet in early July – its video conferencing platform to take on global rivals Zoom, Google Meet, Skype etc, making every feature free of cost to its subscribers. Of course, it is another matter that sharp Indian consumers couldn’t but marvel at the “inspired” user interface of JioMeet and how it looks like a doppelganger of Zoom. While definitive numbers are not yet available, Jiomeet has reportedly crossed over a million downloads in less than a month.
The third set of numbers which really reveal the story is that of the company’s financial health. With 13 investors putting megabucks in Jio Platforms since Facebook’s $ 5.77 billion in April to the most recent investment by Qualcomm ($ 97 M for 0.15 % stake), Jio’s valuation is estimated to be roughly half of the parent company Reliance Industries Ltd (RIL) at $164 billion. Business Insider quoting Credit Suisse estimated Jio to be valued at US $ 88 billion.
In comparison, Airtel’s valuation is less than half at around US $ 42 billion and Vodafone at measly US $ 3 billion approximately. Interestingly, Jio’s valuation is more than all the other companies in the telco space including the likes of MTNL and Tata.
The final and perhaps the most clinching argument relates to the current AGR issue where Jio has zero liability while its current competitors Airtel and Vodafone have huge payables. While Airtel has announced that the company will not only honor its liability but will also continue to grow, Vodafone, on the other hand has time and again expressed its deep financial distress owing to the AGR dues. Clearly, managing AGR payments and continuing to invest in the Indian market will pose a massive challenge to Vodafone and if it continues to get deserted by its consumers, the net gainer will be Jio.
Experts are already claiming that the Jio juggernaut will exceed 40% market share in the mobile telephony space in the next 12 months. However the combined impact of Facebook, Whatsapp and Google’s Android platforms riding on the Jio platform will get the company a lot more than 40%.
CXO Today estimates that in the next 18-24 months, Jio will straddle the consumer market with an excess of 50% market share while making massive inroads in the enterprise communication space which currently has Cisco and Microsoft as a major collaboration player. We expect Jio to make rapid inroads into the SME space and the lower end of the Enterprise space with Jiomeet and its ability to deep-discount the data pricing for video communications.
And who knows, if Jios’ 5G plans play out the way the company estimates, it will be on its way becoming the behemoth in the telecom space in India, a behemoth which will be much bigger than 700 pounds.