Jio 2
Jio 2
Jio 2
In highly competitive Indian telecom market, RelianceJio made a grand entry and made its position
ith world record growth. It changed the whole equation in telecom market. The paper is three parts.
First it talks about Indian telecom industry that attracts Reliance to get entry in it. Second part talks
about market entry strategies. Mr. Mukesh Ambani called it as ‘Datagiri’. It is known as Datagiri
Customers who were using expensive 3G technology got 4G technology at lesser price.
RelianceJio’s entry offers free usage initially which leads world record subscription. Even reliance
faced market entry barriers from existing players and how they were faced. Third part talks about
effects in telecom industry. Some major mergers have taken place. Some telecom players exited the
industry.
I. Introduction
Management theories teach us the price of products should be such, which make the new entry
difficult. Reliance Jio teaches us how to make a grand entry to become major market player. In this
research paper, marketing strategies are tried to be analyzed. Jio follows Market Penetration in
existing market as it enters late. Jio puts better products at lesser price. It offered 4G telecom service
to customers at lesser price. The offers positioned as Free. The way Jio gained market share shows
the Power of Free. It is also termed as Disruptive Marketing Strategy. Mr. Mukesh Ambani
(chairman of Reliance) mentioned in his speech as Datagiri. It was an open challenge to existing
players for competition.
II. Purpose & Objectives
The main purpose is to understand how RelianceJio can make its grand entry and becomes major
telecom market player.
• India is currently the 2nd largest telecommunication market and has the 3rd highest number of
internet users in the world
• India’s telephone subscriber base expanded at a CAGR1 of 19.16 per cent, reaching 1188.5
million during FY07–1
relaxation in FDI attracts foreign investors and thus it makes the fastest growing sector. It is one of
the top five employment providing sector in India. It is expected to generate 40 lac jobs in next five
years. Reasons behind the employment opportunities are government efforts, penetration in rural
areas, and rise in use Smartphone to access internet.
It is important to know reliance in telecom before coming down to RelianceJio. In 2002, Reliance
Infocomm was entered telecom market with slashing price from Rs. 8 per incoming call to less than
Re.1 per call, with incoming and value added services for free. Within a fortnight, Infocomm had a
million subscribers. (Khanna, 2017)
Over the last six years, Reliance first acquired the broadband network needed to roll out 4G services
and then buying a pan-India spectrum. RelianceJio is allowed to provide voice telephony for
additional Rs. 165.8 crore fees. RelianceJio has developed core 4G data network. It uses VoLTE
(Voice over Long-Term Evolution) technology to make calls. Other telecom operators have been
using circuit switching technology to make calls which is useful only for voice and not compatible
for data. So, a call made from Jio is a HD voice data call which is diverted to other operators.
RelianceJio does not account data used for voice call and so, it is free to the customers. It was
opposed by other telecom companies, but by it was not sustained. So, the latest technology and gap
left by existing operators have been exploited by RelianceJio. (Banerjee, 2016)
Power of Free
Reliance Jio was launched commercial telecom services on September 5, 2016. It offered users can
get a Reliance Jio SIM card with the ‘Welcome Offer’, that allows users access to free unlimited 4G
data until December 31, 2016. This data however, had a cap of 4GB of data a day – beyond which a
user would get 128Kbps. Other benefits of the Jio SIM included free voice calling, and no roaming
charges forever. Reliance Jio had announced that the network had created a world record by crossing
16 million in total subscribers in 26 days. It was a grand welcome to the Reliance Jio. Reliance Jio
exercised ‘Power of Free’ market penetration strategy to enter in maturing market. It is also called a
‘Disruptive Market Penetration’ strategy.
RelianceJio faced a problem of voice call-drops heavily. It faced a five crore of call drops in a week
when it entered. Jio blamed that existing operators were creating hurdles and not providing
interconnect for its users, while existing operators said that it was because of congested Reliance Jio
network as a result of free offers. Even RelianceJio faced market barrier as a new entrant. Jio’s
customers were satisfied with data service, but facing problem of call drops. So, RelianceJio asked
customers to use free data in dual sim card mobile till the issue of call drop was solved. It was
because reliance knew that 93 % mobile phones had dual sim and no operator could provide free
data. Existing operators had established network and customer base, while new had to establish its
network and had to penetrate to gain customer base. Reliance had developed IP based network while
Gujarati word ‘Dadagiri’ is to show the dominance. ‘Datagiri’ is looked derived from ‘Dadagiri’
to challenge other telecoms. Mr. Mukesh Ambani said in his speech that during freedom
movement it was Gandhigiri and now it was Datagiri.
Due to grand launch of Reliance Jio, AGR of top telecom companies falls sharply. AGR – It is
Adjusted Gross Revenue) of telecom company. The license fee paid to government is calculated on
AGR. There is a dispute between telecom companies and government because AGR was defined
broadly. Telecom companies argue that revenue generated from telecom services for which license
is provided should be counted as AGR, while government argues that it should include every income
of Telecom Company. (For examples – Selling of handset, income of Fixed Deposit, Selling of
asset.) Tripura high court single bench has already given verdict in favor of Telecom Company.
TRAI (Telecom Regulatory Authority of India) has also said same in favor of telecom companies.
But government has rejected it. (ETBureau, Spectrum Usage Charge - The Big debate: What is
adjusted gross revenue & what it should cover , 2017)
The AGR was dropped in fourth quarter of FY16-17. Sunil Mittal-led Bharti Airtel’s AGR in the
March quarter was down 9.9 per cent sequentially to Rs 10,400 crore, while that of Vodafone India
and Idea fell 12.6 per cent and 8 per cent to Rs 7,300 crore andRs 6,400 crore, respectively,
brokerage ICICI Securities said, analyzing data provided by the Telecom Regulatory Authority of
India (Trai). (ETBureau, Airtel, Vodafone and Idea report sharp fall in adjusted gross revenue,
2017)
The AGR in first quarter of 2017-18 was fell 4.7% sharply. It leads to decrease in government
license fee.
Top of the pyramid invested hugely and make a digital life easier and economical for the bottom of
the pyramid. Thus, it leads to sweet fruits of capitalist market. RelianceJio identifies gap left by
existing telecom players, understands shift in customers’ demand, and developed telecom network
with better technologies with huge investment. It leads to a great grand entry of RelianceJio…
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