Telecommunication It is a wholly owned subsidiary of Reliance

industry in India is one of the most prevalent sectors and is growing rapidly
over the last decade. India is currently the second largest telecommunication market
in the world and contributes to the India’s Gross Domestic Product (GDP) in a
significant way.

the last 8 years, Indian telecom industry is under tremendous pressure due to
the rise in the number of players in the market which has resulted in stiff
competition and rise in capital intensity leading to decline in the
contribution of telecom services to GDP from 2% in FY09 to a low 1.2% in FY17
over the last period. The telecom players in the Indian market have also seen a
constant decline in their profitability ratios during this period and are
unable to earn their cost of capital because of continuous investments in
regular spectrum auctions.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!

order now

industry faced a major disruption and margins impacted because of the high
degree of financial leverage from the new player Reliance Jio. Reliance Jio
Infocomm Limited or Jio is an LTE mobile network operator in India. It is a
wholly owned subsidiary of Reliance Industries headquartered in Navi Mumbai,
Maharashtra. Its services were commercially launched in India on 5 September
2016. It is the only ‘VoLTE-only’ (Voice over LTE) operator in the country
which lacks traditional network support of 2G and 3G, with coverage across all
22 telecom circles in India. It owns spectrum in 850 MHz and
1,800 MHz bands in ten and six circles, respectively, of India’s 22
circles, and also owns pan -India licensed 2,300 MHz spectrum which is
valid till 2035.

Industry before Reliance

Indian telecoms sector has traditionally been voice driven. In 2016, India was
already one of the largest smartphone markets in the world in terms of volume.
Bharti Airtel, Vodafone and Idea were the top three players of the Indian
telecom market and together accounted for more than 74% share of the total
market at the end of March 2016. The market was dominated by these market
players with heavy profits to the larger players. (Figure I of Annexure)

after the launch of Reliance Jio:

After the successful beta implementation of Reliance Jio, it was
launched on September 5th,2016 for the general public. The launch of
Reliance Jio forced all the major telecom operators to change their pricing
strategies, much to the delight of consumers as Jio offered free 4G data as
part of its welcome offer till December 31, 2016. With Reliance Jio 4G SIM, one
would also get free unlimited voice calls (local and STD), with free roaming
across the country. Jio 4G then came up with free 4G data services with a cap
of 4GB usage per day till December 31. The SIM provided access to high-speed
internet, almost throughout the day, and across the country because of Jio’s
huge network. The Jio 4G SIM was available for free at Reliance Digital stores
and several other outlets across the country.

traditional concept of voice over data was shaken up to the core. There was a
sudden change in the data usage and people started questioning about the
pricing of other companies. The competitors in what can be seen as a pricing
strategy to counter Reliance Jio were forced to cut down prices and introduce
new plans to stop customers from luring away. Airtel
announced free voice calls across India bundled with 300 MB of 4G data at Rs145
and Idea Cellular Ltd too was forced to launch a similar offer—bundling free
calls on its own network and 300 MB 4G data—at Rs148 for its prepaid customers.
This was the beginning of telecom war that disrupted the Indian telecom sector
and many analysts suggesting consolidation would be the way out in near future.


PWC has had predictions for key trends for 2017 as
that the data realisation per MB would continue to fall. The telecos would have
no choice but to accelerate the transformation towards a low cost per MB model
which will lead to large cost efficiency initiatives and better connectivity
across the country. It will also further lead to telephone sector consolidating
to five private networks and one public sector (5+1). The mergers being Tata
Group’s wireless phone business acquisition by Bharti Airtel and the to be
collaboration of Vodafone India Ltd and Idea Cellular Ltd. (Refer to Figure II
& Figure III-regarding change in prices and market share is given at the


I'm Neil!

Would you like to get a custom essay? How about receiving a customized one?

Check it out