Reliance Jio Panics the Giants of Telecom Industry

Creating a buzz in the telecom sector, Mukesh Ambani, Reliance Industries chairman announced to launch Reliance Jio 4G service from September 5 onwards. Mr. Ambani said the network will offer free voice calls on every network accompanied by affordable data internet to consumers. Commenting on Reliance Jio’s tariff plan, Mukesh Ambani announced a ‘free welcome offer’ for all Jio customers from 5th September till 31st December 2016. As per the tariff plan of the soon-to-go-public network, a customer will have to pay Rs 50 to get 1 GB of 4G internet data, which lowest in the world. Reliance Jio’s price starts at Rs 19 per day and gradually goes up to Rs. 4,999.00 per month for 75 GB of internet data.

Bharti Airtel share price (-6.48%), Idea share price (-10.91%) and Rcom share price (-9.18%) nose-dived up to 9 per cent on Thursday 1st September, as challenger Reliance Jio priced data tariff for its services at as low as Rs 50 per GB; hence, kicking off a tariff war.

With Reliance Jio’s commercial launch knocking on the door, competitors like Airtel, Vodafone and Idea Cellular have slashed data tariffs and are bundling free calls to drive mass market adoption. These telecom operators have been trying various data pricing strategies, with Bharti Airtel, Vodafone as well as Idea Cellular trying innovative price packages.

With the tariff war closing-in, Country’s top telecom operator Bharti Airtel is gearing up to engage with new entrant Reliance Jio on a different level: data speed.

The company announced on Wednesday it has deployed technology known as “carrier aggregation” in circles like Mumbai and Kerala to combine different bands of spectrum and also make larger blocks of airwaves to offer faster and more consistent 4G data services for the mobile users. This enhanced data service enables peak download speeds of as much as 135 mbps. This is faster than what users get on a normal 4G network.

However, market analysts are still betting big on Reliance Jio. Goldman Sachs reported that Jio network is now available for free to most 4G smartphone users. The subscribers will get three months of unlimited data, voice and a suite of apps for free. According to them, the response to this beginner into India’s telecom industry has been welcomed with open arms, with long queues in company stores. Jio is expected to garner 35 million subscribers over the next two years, with a data volume growth for incumbents slowing to 50 per cent in FY17 from 70 per cent in FY16.