Reliance Jio is seen as a revolution in the Indian Telcom Industry, with an average data consumption of 500 MB per month in 2016 to a staggering 10.6 GB per month consumption 2019. Jio has certainly paved the way for truly digital India. so how did a 2016 upstart, called jio, dislodged rivals and emerged as nation's number one carrier? let's find out in this episode of decoders explained. the beginning: in June 2010, Reliance Industries bought a 95% stake in "Info tell broadband services limited (IBSL)" for $670 million. Although unlisted, IBSL was the only company that won broadband spectrum in all 22 circles in India. In 4G auction, that took place in the year 2010. later continuing as Reliance's telecomsubsidiary, Infotel broadband services limited was renamed as "Reliance Jio Infocom limited (RJIL)" in January 2013. Billionaire Mukesh Ambani telecom venture Jio, which catapulted India as the world's largest mobile broadband data consuming nation in less than 2 years.
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| Anil ambani |
Was first seeded by daughter,Isha Ambani, in 2011. since the idea first cropped up, Reliance jio has spent more than $33 billion to break into India's mobile phone market. So, how do you disturb an entire industry, and make it follow your steps? The topmost idea will be, by initially offering unlimited call services and data transmission at dirt cheap rates. And that's what exactly jio did. With great marketing strategy to a rising fan base, Jio entered the Indian telecom market with a bang. The stage was set for jio, and other telecom companies werejust sitting ducks waiting for jio to make the first moves. This made jio the clear trendsetter in India's Telecom sector. As of 31st January 2020, there are 1156.44 million wireless subscribers in India according to Telecom Regulatory Authority of India (TRAI).
In which Reliance Jio now holds 32.56% of market share with a subscriber base of 376.53 million (as of 31st Jan 2020). The price war and increasing market share: Jio started his services by initially offering unlimited calls and data but no company can survive with this type of business model for too long. as Jio offered his services for almost free in its welcome offer, other telecom companies were looking for different ways to retain their subscribers. and this led to a start of new price war between the top telecom companies like Airtel,Vodaphone and idea. in a country like India, the company which has the cheapest plans would naturally attract more customers. this led to decreasing the prices and offering more services at dirt cheap rates. Well, this does sound good from customer's point of view but the telecom companies who are taking huge losses in order to survive. in 2016 when Jio launched, India had 10 telecom companies operating but as of May 2020, there are only four major operators. Majority of Indian telecom companieswere shut down either because of bankruptcy or they merged with other big companies like Airtel and vodaphone to survive this price war. in the end, jio turned out to be the winner in this price war, by gaining 388 million subscribers in less than 4 years. But the question arises here, how far a company should be allowed to go, before becoming the monopoly The Rising Debt and Increasing Stakes Sales: for any company to describe the market and emerge as a leader, takes a great amount of capital investments. And Reliance jio became the leader of Indian telecom industry by mounting a huge amount of debts at present, the Gross debt of Reliance Industries is estimated at Rs. 3.36 lakh crores. At the 42nd annual general meeting of Reliance, its Chairman and Managing Director "Mukesh Ambani" had set a target to become a zero net debt company by March 2021. Certainly, Reliance seems to be doing pretty good so far to achieve this target in the last 4 weeks. Jio brought investments of whooping Rs 67,194.75 crore ($8.82 Billion) from the likes of Facebook, Silver Lake, Vista Equity and General Atlantic. Facebook the social media giant brought 9.99% stake in Reliance Jio for Rs. 43,574 crore ($5.7 billion).
This deal was the largest foreign direct investment (FDI) in India for a minority stake. This investments values Jio Platforms at an equity value of Rs 4.91 lakh crore ($65 billion+). that is more then $65 Billion.But will it be enough for Jio’s debt? Only time will tell as Jio steps in e-commerce with its JioMart. Future for Jio: With huge investments, Jio now has the backing of Facebook. Jio needed a technologically advance partner to fulfil its ambitions. The Jio Mart is one such platform which is meant to benefit the most from Reliance Jio and Facebook’s deal. Where Facebook was struggling to get the approvals of UPI payment for WhatsApp, At the same time Jio was looking for a platform for its Jio Mart. The deal enabled both the companies to fill their voids and get what they wanted. Jio now has WhatsApp as a platform for Jio mart and Facebook got a deeper penetration into the Indian market. It is not entirely clear at this stage what the eventual shape of this collaboration will be but, it has certainly led to data privacy concerns. For now, the deal hasn’t shown any major changes in how Jio handles data privacy of its users, but as Facebook is already known for gathering a lot of private data for its targeted advertisements, it will be a key factor to keep an eye on as it affects us, the consumers in the end.
No matter what the future holds, Reliance Jio has been the leader in transforming India as a truly digital nation. For now, Jio is most likely to maintain this position as its competitors struggle for survival. So, this was the story for Jio and how it has changed the Indian telecom industry. Let’s us know about your thoughts on this in the comment section. We will be doing more of this type of videos in future, so stay tuned for that.
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