The entry of Reliance Jio brought revolutionary changes in India’s telecommunication market. The richest and most powerful corporate house of India entered in telecommunication segment in September 2016. The company has been able to capture 27.8 percent of market share with 32.3 crore customers as of May 2019 overtaking Airtel and is the second largest telecom operator in the country after Vodafone Idea Limited.
As the entry of Reliance Jio brought revolutionary changes in India’s telecommunication market, the country’s youngest telecom operator has replaced Bharti Airtel as the second largest telecom operator in terms of the number of mobile service subscribers. With nearly 32.3 crore consumers with 27.6 percent of market share, Reliance Jio surpassed Airtel which has 320.38 million users and 27.6% market share, by the end of May this year. Vodafone-Idea, the merged entity of Vodafone India and Idea Cellular is the largest player in the market with 38.76 crore consumers and 33.36 percent of the market share. Reliance Jio has been able to enroll more than 32.2 crore consumers (27.8 percent) and 31.7 percent gross revenue in less than three years.
Telecom Regulatory Authority of India (TRAI) counts active as well as inactive SIMs as consumers, although there are overlaps. After Reliance Jio forced the small players out of the market, the existing big players intentionally started weeding out inactive users with compulsory monthly recharge of 35 rupees. In order to increase average revenue per user (ARPU), Airtel and Vodafone launched compulsory recharge plan in November.
The weed out strategy worked for Airtel as well as Vodafone. These companies lost the consumers in the lower end of spectrum but the ARPU improved. Airtel lost 15 lakh customers in May while Vodafone lost 57 lakh users. On the other hand, Jio added 81 lakh customers in the same month. However, Jio’s ARPU declined to Rs 122 in June quarter from Rs 126.2 in March while Airtel’s improved to Rs 123 in March from Rs 104 in December quarter. Vodafone Idea also showed little improvement in ARPU with Rs 104 per user in March from 89 in December quarter.
The entry of Mukesh Ambani-led Jio forced many small players out of business and the merger of Vodafone and Idea, two of the largest independent telecom operators. The data tariff rate in India is the lowest in the world, thanks to Mukesh Ambani. Since his company entered the market with a 1GB free data and unlimited free calling package throughout India, the prices of calling and data services have crashed, the existing players like Vodafone and Jio have been forced to cut the rates in fear of being thrown out of the market. He was being compared to the freebie distributing Chief Ministers of Tamil Nadu but he was doing it with his own money, not the taxpayers’ money.
According to a report by venture capitalist Mary Meeker, India has the second largest internet user base in the world due to the entry of Jio. Almost half of the global population (3.8 billion) uses the internet with China accounting for 21 percent of the user base followed by India and US with 12 and 8 percent respectively. The 12 percent of global internet user base pie translates into more than 45 crore internet users in the country or more than one-third of the total population. The internet user population doubled in India in the last one year due to the entry of Jio.
Mukesh Ambani-led Reliance group is known for its aggressive pricing strategies in the market. It was the first company to come up with a plan for free incoming calls in India in the early 2000s when his father, Dhirubhai Ambani was leading the company.
