A year of Reliance Jio's domination and its impact on the telecom industry

It all started on September 5, 2016, when Reliance Industries Limited(RIL), Chairman Mukesh Ambani announced the launch of Reliance Jio services at the 42nd Annual General Meeting, and today the company has completed one year of its commercial services.

But despite facing so many ups and down Jio gained 9.49 percent market share as on May 31, according to data by Telecom Regulatory Authority. Further it has now become the fourth largest wireless telecom operator in India.

The company started its operation with the Welcome offer which gave unlimited data, voice, video calls and messaging access for three months and as expected, the whole telecom industry was shaken. In fact, Jio has forced has telcos to change their tariff plans to retain their users.

Cellular Operators Association of India (COAI), Director-General, Rajan S Mathews told Gizbot earlier that, "The telecom industry has lost about 20 to 30 percent of revenue due to Reliance Jio's free services."

"Earlier, before Jio came into the game there were losses but year over year revenue was increasing," he said.

Rajan also pointed out that 2016- 17 was the first year in the history of telecom industry that total revenue of the industry has declined. When asked about, whether Jio was the reason behind losses, Rajan replied free 'offers' by one company is the principal reason behind it."

In a recent past, India Ratings and Research (IndRa) firm also said that Indian telecom industry has lost around 20 percent revenues due to free services being offered by Reliance Jio. The firm also said, "smaller telcos may not be able to sustain cash burn by operating independently and are looking for exit options."

Meanwhile, the company has managed to garner 125 million subscribers in a year with a record of 50 million users in 83 days which is expected to increase further after JioPhone launch.

Before Jio came into the game, there were about 10 to 12 telecom operators and now only three and four left like Bharti Airtel, Vodafone-Idea RCom-Aircel & Sistema, and two State- run operator BSNL and MTNL apart from Mukesh Ambani owned Reliance Jio.

In fact, Vodafone and Idea have announced that they have reached an agreement to combine their operations in India. The combined company would become the leading communications provider in India with almost 400 million customers, 35 percent customer market share and 41 percent revenue market share.

Post the amalgamation, Vodafone will hold 45 percent in the combined entity while Idea promoters will hold 26 percent share. The rest will be held by the public. The combined entity of Aditya Birla Group's Idea Cellular and Vodafone India will have the widest network in the country and pan-India 3G/4G footprint.

Similarly, Reliance Communications has entered in talks for a merger with Aircel.

However, the main impact that the telecom sector has faced is the financial stress that has been caused due to increasing pressure after Mukesh Ambani-led Reliance Jio was offering free services and cheap data offers that has led to massive fall in revenues and a debt of about Rs. 4.6 lakh crore.

Besides, the Government has also constituted inter- ministerial group to suggest reforms in the telecom sector which are expected to submit its report on September 8 to Telecom Commission.