Reliance Jio's Audacious Bet: Disrupting India's Mobile Telephony and Data Market
|
Case Code: BSTR547 Case Length: 20 Pages Period: 2017 Pub Date: 2018 Teaching Note: Available |
Price: Rs.500 Organization: Reliance Jio Infocomm Industry: Telecommunications Countries: India Themes: Disruptive Innovation |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
The Journey of Jio
Reliance Industries Limited (RIL) was started by Dhirajlal Hirachand Ambani (Dhirubhai) as Reliance Trading Corporation (RTC) in 1958 with just Rs. 50,000. Prior to this, Dhirubhai had worked as a petrol pump attendant and then as a clerk in an oil company.
In 1966, Dhirubhai set up his first textile mill turning out polyester cloth under the Vimal brand.
In 1976-77, RTC recorded an annual turnover of Rs. 700 million...
Jio's Big Bang Disruption
Having established the infrastructure, Jio had to overcome the next hurdle of acquiring customers. The company planned to lure consumers by offering high speed mobile internet at affordable prices. As of 2015, less than 15 percent of the Indian population had access to 4G connectivity. Jio had ambitious plans to offer 4G connectivity to 90 percent of the Indian population by 2017....
The Jio Effect
By the end of September 2016, Jio had successfully disrupted the market, garnering 16 million subscribers – an all-time record for any telecom player. In addition to this, the demand for VoLTE enabled handsets was increasing. According to a report by market research firm, Counterpoint Technology, 80 percent of LTE compatible smartphones shipped during the July-September quarter (Q3) were VoLTE enabled, as compared to 63 percent in Q2 and 30 percent in Q1....
Allegations Against Jio
The telecom companies considered Jio’s offer as being anti-competitive and predatory. Airtel and Idea complained to the TRAI and urged it to look into the matter. In response to these allegations, Jio stated that these promotional offers would only be valid up to December 3, 2016. According to the TRAI directive, promotional offers could be allowed for up to 90 days...
Competitors Follow Suit
With Jio increasing its subscriber base by the day, competitors gave in to the price pressure. In January 2017, Airtel launched its own free data and calling features for a year. Under the deal, the telecom operator offered free data to its customers who took a 4G connection for Rs. 9,000 for a year. Some telecom companies also offered a 30 to 50 percent discount on night usage data packs...
Jio's Game Plan
By launching Jio, Ambani did not aim to target high-end customers with the company’s telecom services. It sought instead to target 100 million users within the first year of its launch. In addition to launching its services in the mobile telephony and data market, Jio launched Lyf mobile phones priced between Rs. 4,000 and Rs. 19,000 – a segment where most of the device makers were aiming to capture a portion of the pie. According to Jio, the unique selling proposition of these devices was their ability to convert an ongoing voice call to a data call at a single command without interrupting or disconnecting the call...
The Results
By the end of March 2017, Jio stood as the top wireless broadband service provider with 108.6 million subscribers (Refer to Table II for total number of subscribers of telecom companies). The telecom major also stood as the fourth largest telecom player after Airtel, Vodafone, and Idea...
Will Jio Maintain its Momentum?
Some industry observers believed that Jio had disrupted the Indian telecom market forcing incumbents to reduce tariffs. They felt that the Prime membership program could help Jio maintain its momentum.....
Exhibits
Exhibit I: Difference between Voice Networks and Data Networks
Exhibit II: Total Subscribers of Telecom Companies (March 2016)
Exhibit III: Market Share of Telecom Companies
Exhibit IV: RIL’s Five Year Financial Summary (in Rs. Billion)
Exhibit V: Falling Revenues and Operating Profits of Indian Telecom Companies
Exhibit VI: Jio’s Falling Monthly Tariffs
Buy this case study (Please select any one of the payment options)
| Price: Rs.500 |
Price: Rs.500 | PayPal (11 USD) |
