When Reliance was launched, it shook the telecom industry like no one else. Completely shattering the barriers of high cost outgoing calls, making incoming calls free and introducing a low-entry point of mobile telephony for every Indian.
However, Mukesh Ambani is back again with Reliance Jio. Aiming to remove the general stagnation in the telecom marketplace, Jio was launched on 5th September. And just after two months into the market, we are seeing the same disruption level that Reliance had when it was first launched.
With cheapest data plans and free voice calls till the end of the year, the outrageous offering of Jio has captured many mobile users across the entire nation. The newest kid on the block has been in fact embraced with open arms by the people and other services providers are acknowledging that Reliance Jio is here to stay.
Let us see how Jio has impacted the Indian telecom market, and what can we expect going ahead into the future.
Beginning of a Fierce Mobile Tariff War
Jio is offering the lowest data tariffs in the country, and also letting users make voice calls for free not just on its network but also from Jio to other networks. As such, this has affected other service providers immensely. Airtel, Vodafone and other service providers are now slashing their data rates to combat Jio's offer.
Drop in the Balance Sheets of Other Telecom Companies
With free calls and dirt cheap data rates, Jio is being used more and more by many. While this has forced other companies to lower their rates, following the slashing of data tariffs, Airtel in its Q2 saw a 4.9% decline in profit.
Idea also saw its data revenue decline by more than 19 %. Moreover, existing operators are also thinking on making VoLTE network calls free. This could hurt their margins further.
Increased Demand for VoLTE Enabled Handsets
Since Jio was launched in September. the demand for Voice over LTE (VoLTE) phones in the country had grown significantly. As VoLTE technology uses a 4G network, it has been forecasted that 80% of LTE enabled phones to be shipped into India by the first half of 2017 will use VoLTE technology.
On the other hand, VoLTE will become the default basic minimum smartphone technology in the country.
Consolidation of Smaller Service Providers
Soon after Jio's launch, Ambani's younger brother Anil Ambani announced his company Reliance Communications' merger with rival Aircel. The long-awaited move led to the creation of a Rs 65,000 crore entity, which is also reportedly in talks with Russia's Sistema, which already holds 10% in RCom.
As for companies like Airtel, Vodafone, and Idea it will be a battle to hold on to their respective market shares. We could likely see more consolidation involving smaller players who may find it hard to survive.
Massive Investment in Visual & Delivery of Content
With cheap and fast data, people are likely to consume more and more audio-visual content online. Jio has already announced that they will create huge, online libraries of 10 million songs, 6000 movies, 60,000 video songs, 1 lakh episodes of TV shows in 10 languages, besides operating 300 live TV shows.
Therefore, in the coming days, we can anticipate that there could be massive investment in the entertainment sector, wherein startups would be funded to launch digital content enterprises, to satisfy the hunger of millions of data users.
In addition, newer technology to deliver streaming data via mobile would be created, triggering more investment in this sector.