Reliance Industries Ltd.: Reliance Jio vs Airtel: Indian billionaires -Bharti Airtel vs Reliance Jio Securities Telecom Battle in India- Telecom war: How will Bharti Airtel & Reliance Jio move forward to #makeIndiagreatIndia
2. The main driving forces for the preservation of digital data are legal and
business requirements. For telecommunication firms it is obvious that these
requirements need to be met at all costs, and the importance of digital
preservation is therefore widely recognised, with policies and strategies
developed and implemented throughout the organisations. The business software
solutions already in use play an important role for preservation, but are
supplemented by additional software packages. However, as legal stipulations
generally do not require the telecommunication firms to keep their data for more
than ten years, there is smaller interest in preserving digital information for the
long term
Introduction
3. Reliance Jio is exploiting the gaps left by Airtel
What Reliance Jio has done, at great cost, is to move into all those spaces that were either left vacant or were just not visible to incumbents like
Bharti Airtel
Through all the fur that’s been flying around ever since Reliance Jio launched its services in September 2016, it is difficult to escape the
conclusion that the existing market leader Bharti Airtel was simply not prepared for the ferocity and the intensity of the churn it would trigger.
Reliance Jio’s entry was no surprise. Indeed, the repeated delays in the launch of its services, gave Bharti as well as the other rivals more time to
batten down the hatches. Over the last six years, Reliance had made its intentions quite clear, first acquiring the broadband network needed to
roll out 4G services and then buying a pan-India spectrum.
Indeed, Bharti of all companies already had a taste of what a behemoth like Reliance would mean as a competitor. Reliance’s objective in 2016,
as it was in 2002, is to grow the size of the market exponentially and to make money from the ensuing volumes. In 2002, Reliance Infocomm
succeeded in opening up the Indian market by crashing prices all the way from Rs8 per minute for incoming calls to less than Re1, with
incoming calls and value-added services thrown in free.
Within a fortnight of its launch, Infocomm had a million subscribers. Strangely, at that stage, Bharti was a small company lacking in the
resources to counter such a capital-intensive battle. But the telecom market of 2017 is vastly different from the one in 2004 that Reliance
Industries chairman Mukesh Ambani was forced to quit. In these intervening years, Airtel has been the leading market player with a share of
over 30%. But being big can sometimes be a handicap.
Companies with high market shares in their industries have actually been more vulnerable than would seem—IBM, Gillette, Eastman Kodak,
Procter & Gamble, Xerox, General Motors and Caterpillar are some of the companies which lost big to new entrants. The classic case is that of
Pan American World Airways, popularly known as known as Pan Am, which was the largest international airline for nearly 70 years since it
began operations in 1927. But hit hard by the deregulation of the US airline industry and its failure to come up with a viable domestic network
led to a steep and precipitous fall leading to its final bankruptcy in 1991.
4. What Reliance Jio has done, at great cost it must be said, is to move into all those spaces that were
either left vacant or were just not visible to incumbents. Free voice as a part of a package where a
customer is already paying for data, seems in hindsight an obvious facility. What’s more, by
plumbing for an all-data strategy, Jio also seems to have read the changing requirements of Indian
customers better.
In a statement in February, Ambani claimed India had become the world leader in mobile data
usage with Jio users consuming more than 100 crore gigabytes (GB) of data per month. That’s
borne out by numbers from market regulator Telecom Regulatory Authority of India (Trai) which
shows that the entry of Jio in September 2016 led to a sharp rise in data volumes. Even though that
is being attributed to Jio’s free offers, what is clear is the latent appetite for data usage in the
country.
While there is no guarantee that Jio’s market share will lead to commensurate profits, given the
massive investments it is throwing behind its many free schemes, it has forced Bharti along with
other companies into matching offers. The dynamic would have been vastly different had Airtel
chosen to make the same offers a year ago when Jio’s position was relatively uncertain. Now, it is
Mukesh Ambani who’s calling the shots, forcing the erstwhile market leader into playing catch-up.
Of course, Jio is leveraging the strong balance sheet of its promoter and analysts are right in
questioning the viability of such a scorched-earth policy in the long run. But those analyses are
based on seeing the market as it is today. What if, as happened a decade ago with voice, the Indian
market for data explodes? Jio’s tariff tactics may end up looking quite smart. In any case, it isn’t
the first company to use competitive pricing to gain market share. One of the most successful
examples of the use of pricing against competition came from an incumbent, Frito-Lay. In the
1980s, under attack from beer-maker Anheuser-Busch’s newly launched snack foods under the
Eagle Brand, Frito-Lay struck back with deep across-the-board price cuts eventually forcing the
newcomer to capitulate and in 1996 sell off its plants to Frito-Lay and the Eagle snacks brand
name to Procter & Gamble Co.
10. Jio Impact
Jio will supply its new phone effectively free of cost to users who are ready to
deposit Rs 1,500 with the company for three years. This, industry experts expect,
will force others to come up with similar offers to minimise damage.
In fact, most of these handset makers are already believed to be working on their
own low-cost 4G devices, besides adding more features to basic phones, they
said. They are now expected to form more partnerships with telecom service
providers to take on Jio.
While the industry anticipates pressure on the current feature phone vendors,
several experts see a better long-term for the overall market as the Jio phone
would push more users towards smartphones — the expectation is that after
having hooked to the Internet, users would go for better experience. That should
boost the segment’s growth, they said.
The pace of smartphone growth has slowed over the last year or so, as feature
phone users stayed away from upgrading due to reasons such as affordability.
“This is a disruption … it will shake up the ecosystem …”
12. Although Bharti Airtel is one of the largest
companies in the telecom sector and have a big
impact on the communication sector, but RIL
doubles shareholders’ money every 2.5 years for last
40 years .
Recently,RIL adds Rs 17,000 cr to investor wealth as
Ambani launches JioPhone Airtel, Idea, RCom fall
as RIL unveils JioPhone at effective price of Rs 0.
Conclusion