CASELET Reliance Jio—The Game Changer? The curtain is up in India’s high-decibel war of the ants as Reliance Industries Ltd (RIL chairman, Mukesh Ambani, spelled out an aggressive plan for the much-awaited Reliance Jio 4G services atthe company’s 42nd annual general meeting (AGM) on 1 September 2016, With a bold tariff plan, low-cost mobile phones, and free voice calls for a lifetime, Reliance Jio Infocomm Ltd kicks off a new phase of turbulence in the world’s fastest growing telecom Imarket. Some claim the announcement has sparked a virtual bloodbath in the indian telecom sector and is seen as one of the biggest moments in corporate battles in recent times. ‘The impending launch of Reliance Ji had been hanging like a Damaces’ sword over the other players. The value destruction ths venture has unleashed has not spared anyone. The new game is expected to change the playing field for companies in the telecom sector. It will see a realignment of many big players with the smal players succumbing before the sheer power ofjio, whose policy of spending its way to market leadership has completely altered the business dynamics ofthe telecom sector in India. The company is collaborating with nearly all smartphone makers to bundle three months of ree data and voice with handsets Buyers ofthe bundled devices wil be eligible fora SIM card tat wil allow them to access the Jio network immediately. Presently, the company has over 1.5 million subscribers. Jio's bundling scheme with Samsung has catalysed sles, which grew by 15-20 per cent within one week ofthe launch, According toa Morgan Staley research report, Reliance io is likely to have 30 million subscribers by the end ofthe fiscal year with revenue of over billion. ‘The current market leader Bharti Airte's stock dropped by 9 per cent ater Mukesh Ambans AGM announcement wihile Idea Cellular Ltd, another important player, lost 7 per cent, indicating how the game was warming up. o's entry could also mean t For consumers, however, this could be a bonanza, particularly once Airtel and Vodafone also unleash their own competitive tariff plans. Jio will price mobile phone data as low as 250 trom gs wa cambeigeoplore Unersy eS ry, on 0 a 2019 a 1016 ste tote Cambrige Core terms oe sale. ‘comecrgartrns geo org 1017978 04687058.03,436 mobile Internet charges func, The Jo launch but wil benefit the per gigabyte (G8). Two days later, Bhar! Airtel slashed 4G and By up to 80 per cent to as low as 251 per GB in anticipation ofthe io la vyinely to disrupt the business environment for the telecom players Fensumers in the process. “The dela in Reliance J's launch gave incumbents ample time to tweak thei tariff, and it was feared that that tis might limit the former's ability to disrupt the markets. However the Company's entry-level tariffs turned out tobe considerably lower than the Street estimates his came as a Surprise as the market was not expecting io to aggressively slash prices this way. There has been a significant migration of customers. However, competitors 378 Tkely to wait and see how Reliance Jo's services deliver itwas clear in a week's time that Reliance jio would offer bundled packs. I now a0Pea"s that they may have to offer more value for money. Earle, Jio's launch was expected 0 be largely disruptive in terms of data services. tis important to note that over 70 percent of the industry's revenues come from voice services ‘The saving grace is that in the monthly packs, Reliance Jo has no plans between the entey-level?149 offer and the 2499 offer. Since the average revenue per user for most telcos |s much below the 8499 level, it remains to be seen how many customers would be tempted toupgrade. The return on investment in the telecom sector was already Low, in single-digit, teen before Reliance Jo's launch. Now, with tariffs set to fall again, and investments set co fise, things are likely to worsen, Reliance Jio's attractive data tariffs may well push Bhart) Intel and idea to increase their capital expenditures. Despite this, a number of analysts have given buy’ ratings on stocks of current incumbents analysts feel that this is a surprise as the market was not expecting Jio to aggressively target the low-end market Reliance io launch is definitely set to jolt india’s telecom sector. reer some fee that high-end customers may not switch toJio overnight by abandoning theirensting operators. Reliance jo will ensure that marginal players, such as Aircel, R-Com. sre DocoMD, and Telenor, mil exit and, thus, the data market will expand significantly see oon g benefit Bharti Airtel and Idea Cellular. Bharti nfatel would also emerge as a key Deneficiary 28 data demand would lead to more towers and tenancies ‘Hith ty'untimited free voice cals and the promise of arguably the cheapest data services onthenctwore thet only supports 4G, the fastest data delivery speed for mobile phones, Jio aoaresnend te start a cost war but faced its first hurdle early on inthe race, with charges of Haare drops over the network. A whopping 80 percent of ios calls ave been falling caverns toa statement issued by the company within 15 das of launch. However i saa aumtyis major network providers such as Airtel and Vodafone for this, saying Arar pad nat provided enough interconnection points. Reliance io has claimed that the ae ne rretce are not due to natural congestion, but artificial blockage of services. rate Sruat carventy the largest network operator in Indi, claimed that o's own network Sacer ant eceuting in the large aurber of call érops and providers had given enough interconnection paints to Ji to handle its taffc cE F ince Industries had deployed the largest 100 ‘tthe io launch, Ambani had said that Rian Bee aac gngeterm evolution (VOLTE) network, which provides crystal clear voice res ades quate Insane cal connectivity the last cll ops, and auniauesbity to use dita and voce serultaneousy- However, users aso felt that they had Been denied Benefits of superior voice technology as promised. : pe technology as Prom ecom operator was abusing its leadership position, Alleging that the country’s largest tele’ ng Reliance jio stated that it appears thatthe au ice will continue to suffer and indian ity of se mma opr nate ssncustomers will be denied the benefits of superior and fre voice services asa result of such ancompettive behaviour. Whatever the scenario thsi that the actual problem may be much graver—and that not only Rellance, but all network operators may have to wor on improving the number and quality of towers in the country. Any anti-competitive Move aimed at sting competition will be against pubic interest and fal Pay Reliance Jio had grabbed 8.29 per cent subserber marketshare By 31 March 2017, according tothe subscription data released by the Telecom Regulatory Authority of India The telecom operator added 58.39 lakh subscribers in March. The same manth Saw Airtel with the largest chunk of the market share pleat 23.39 per cent, followed By Vodafone at 1787 per cent, Idea Cellular with 16.70 percent was a clase third. The data also revealed thatsio was also the top inthe wireless broadband service provider ist, followed by Bharti Atel, Vodafone, and idea Services. dio after six months of free offers launched Prime membership that gave Its subscribers dbscounts on app usage and data benefts fora year for a one-time recharge of ¢99. It has since rlled out the Dhan Dhana Dhan scheme, which had minimum recharges of around £300 for Benefits for three months, As of 20 May 2017, Reliance Jo, whichis now the fourth largest telecom operator in the country, continued to drive growth in the mobile telephony segment. thas crossed the 100 milion eustomer mark. Uncertainties, however, sil loam forthe telecom sector, a recent addtion being the anticipated VoLTE feature phone launch by Jio. This can increase the addressable market for Jo substantially. Incumbents have weathered the storm of io fee services fairly well. As Merril Lynch's analysts say, i's impact will not be as large and sudden as in the previous two quarters, since it has finaly stated charging for its services. However, given the precarious state tome oftheir finances are in, they can barely afford a further worsening of the Industry's Structure. Going by the mood Ji has been in, ial remains uncertain, It is too premetore to make any speculations now but the business environment forthe telecom sector In nia isnot the same any more Questions for Discussion |. How has the business environment altered for telcos after th 2. Can the launch of io be seen as a sustainable business model Comment. 3. Reliance Jio is being seen as a game changer in the Indian market wi Competitive strategies. What kind of HR approach do you think th, organization would need? fe launch of Reliance Jio? siven the Indian conditions? ith disruptive is kind of an