Site Loader

Telecommunication
industry in India is one of the most prevalent sectors and is growing rapidly
over the last decade. India is currently the second largest telecommunication market
in the world and contributes to the India’s Gross Domestic Product (GDP) in a
significant way.

For
the last 8 years, Indian telecom industry is under tremendous pressure due to
the rise in the number of players in the market which has resulted in stiff
competition and rise in capital intensity leading to decline in the
contribution of telecom services to GDP from 2% in FY09 to a low 1.2% in FY17
over the last period. The telecom players in the Indian market have also seen a
constant decline in their profitability ratios during this period and are
unable to earn their cost of capital because of continuous investments in
regular spectrum auctions.

We Will Write a Custom Essay Specifically
For You For Only $13.90/page!


order now

The
industry faced a major disruption and margins impacted because of the high
degree of financial leverage from the new player Reliance Jio. Reliance Jio
Infocomm Limited or Jio is an LTE mobile network operator in India. It is a
wholly owned subsidiary of Reliance Industries headquartered in Navi Mumbai,
Maharashtra. Its services were commercially launched in India on 5 September
2016. It is the only ‘VoLTE-only’ (Voice over LTE) operator in the country
which lacks traditional network support of 2G and 3G, with coverage across all
22 telecom circles in India. It owns spectrum in 850 MHz and
1,800 MHz bands in ten and six circles, respectively, of India’s 22
circles, and also owns pan -India licensed 2,300 MHz spectrum which is
valid till 2035.

Industry before Reliance
Jio

The
Indian telecoms sector has traditionally been voice driven. In 2016, India was
already one of the largest smartphone markets in the world in terms of volume.
Bharti Airtel, Vodafone and Idea were the top three players of the Indian
telecom market and together accounted for more than 74% share of the total
market at the end of March 2016. The market was dominated by these market
players with heavy profits to the larger players. (Figure I of Annexure)

Scenario
after the launch of Reliance Jio:

After the successful beta implementation of Reliance Jio, it was
launched on September 5th,2016 for the general public. The launch of
Reliance Jio forced all the major telecom operators to change their pricing
strategies, much to the delight of consumers as Jio offered free 4G data as
part of its welcome offer till December 31, 2016. With Reliance Jio 4G SIM, one
would also get free unlimited voice calls (local and STD), with free roaming
across the country. Jio 4G then came up with free 4G data services with a cap
of 4GB usage per day till December 31. The SIM provided access to high-speed
internet, almost throughout the day, and across the country because of Jio’s
huge network. The Jio 4G SIM was available for free at Reliance Digital stores
and several other outlets across the country.

Post Author: admin

x

Hi!
I'm Erica!

Would you like to get a custom essay? How about receiving a customized one?

Check it out