With RJio’s launch, consumers will become king while operators will bleed leading to faster consolidation making the upcoming spectrum auction more relevant
BY 11.35 AM ON 1 SEPTEMBER, some twenty minutes into his speech to the shareholders at the 42nd Reliance Annual General Meeting (AGM), Reliance Industries chairman Mukesh Ambani had made it clear that their 4G LTE services under brand name Reliance Jio (RJio) — to be launched on 5 September — will come with free voice calls, zero roaming charges, simple tariff plans and a host of attractive offerings, making the worst fears of incumbents such as Airtel, Vodafone and Idea come true. For consumers, there can be no better news. Voice and data services bundled together at such low price points from RJio now mean that other telecom operators will have to come out with counter offers to prevent their subscribers from jumping on to the Jio bandwagon. Businesswise, experts say RJio’s entry will lead to further consolidation in the sector. Here are some quick numbers. Voice accounts for 80-85 per cent of the revenues of present players, while data accounts for the balance. This is set to change going forward. The average revenue per user (ARPU) for telecom players is less than Rs 195 per month — one of the lowest in the world. Incumbents are already saddled with heavy debts and now the ensuing tariff war with RJio can make things worse for them.
Leading up to the Reliance AGM, there were bitter and public fights between the new entrant RJio and the incumbents over interconnect points. Referring to that Ambani said, “Healthy competition is welcome and the incumbents are better placed with their wider distribution network. However, during the trial period, we witnessed 5 crore call drops as points of interconnect were not provided by incumbent operators. Incumbents should not create hurdles for the new entrant.”
The writing on the wall
This story is from the September 19, 2016 edition of Businessworld.
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This story is from the September 19, 2016 edition of Businessworld.
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