In our series of discussions about telecom operators and what each player has done well, there is one operator that stands out from the rest, and looking at the numbers to determine a name is an exercise in futility. Mukesh Ambani led telecom operator Reliance Jio has trumped over the other competitors owing to a perfect mixture of pricing, strategy, and product offerings. However, there are slight lapses in the game that Reliance Jio seems to be plotting, along with some learnings that other telecom operators can pick from. Here we discuss some of them.
The Game of Competitive Pricing
Reliance Jio Infocomm started its success story by offering free data to all its subscribers for quite a long time. The foray of the telco started a pricing bloodbath which reduced the per GB data price from Rs 226 to Rs 7 in 2019. However, this is not the only thing that helped Reliance Jio in climbing to the top of the food chain. The introduction of the JioPhone was the second feather in the cap for the company. This helped the telecom operator in foraging for the rural consumer. Plans which were specially tailor-made for low-paying, JioPhone users clicked with the customers and led to the 300 million+ subscriber count which Jio now boasts of.
Downsides of Aggressive Growth
This mass addition of subscribers at the cost of low prices has surely had its downside. The ARPU of Reliance Jio now stands at Rs 138.2, which is definitely on the lower side, and the analysts don’t agree that it would be sustainable for the long term. Reliance Jio’s strategies have been the catalyst for a tariff hike, which is now imminent and is being seen as a correction in industry pricing. This is a tribute which all telecom operators will pay equally, but some like Vodafone Idea happen to be more in need of it as compared to others. Reliance Jio’s acquisition of the spectrum in March 2021 also hints towards the increasing capacity and coverage for 4G and an imminent 5G rollout in the near future as well. Helped with deep pockets, no doubt, Reliance Jio finds itself in better trenches to invest and boost network, which might be suffering a little bit at this point because of the very high subscriber count, and increasing traffic.
Challenging the Wired Broadband Industry
The JioFiber brand is another success story of its own, which has hit a chord with the customers. The lure of FTTH connection, coupled with OTT and other add-ons, has surely been a game-changer in the wired broadband market. This move, combined with the introduction of the tariff hike and a boost to the prepaid plans, can be the last nail in the coffin to solid sustainable finances for Reliance Jio. However, there are some areas where even the telecom leader can make some changes. The topmost priority for Reliance Jio should be boosting its coverage and capacity, as a high subscriber count means next to nothing if the users are not active and come with a high churn rate. The extremely fast networks like Vodafone Idea and Bharti Airtel, with their attractive offerings, are pulling customers towards their platform constantly. The second might be an introduction of services like Binge-All-Night from Vodafone Idea and Weekend Data Rollover, which might be used as tools to soften up the effect of the inevitable price hike in the telecom industry. Now it remains to be seen whether Reliance Jio remains the unchallenged telecom leader or is surpassed by the likes of Bharti Airtel. In the culmination of learnings from the telecom operators, we have seen a lot of steps that have helped these companies. The private players have taken gambles which have certainly paid off, and some of these can even be replicated by the public telecom operator, BSNL, which I will be tackling in my next piece.
