Project APSM 11 - Sumit, Hari , Shelly and Sandeep

Problem Statement

Despite fierce industry competition,

how did Reliance Jio enter the
telecom sector ?
 GLIMPSE OF INDIAN TELECOM INDUSTRY

 The Indian telecom sector has emerged as one of the leading potential markets
in the global context and witnessed high-paced growth over the past 25 years
 The telecom industry of India has experienced dramatic changes over the
years. Technological innovations and regulatory changes have been the twin
factors responsible for setting the stage right for the evolution in this space
 Easy market access to telecom equipment
 A fair and proactive regulatory framework
 Deregulation of Foreign Direct Investment (FDI) norms
 According to a study by GSMA, by 2020 India will be the fourth largest smart
phone market
 Smart phone shipments during 2016 stood at 109.1 million units
 India’s telephone subscriber base expanded at a CAGR of 19.16 per cent,
reaching 1194.5 million during FY07–17
 Indian telecom sector’s revenue grew at a CAGR of 7.07 per cent to US $41.6
billion in FY16
Source: TRAI Press Release, 19 May 2017
Industry Structure(PRIOR TO ENTRY OF
RELIANCE JIO)
Major Players in Telecom Industry

Share of Top Five Telecom Players in Total Source: TRAI Report

Subscribers as on 31 Mar 2016
Porter’s Five Forces Analysis of Telecom Sector

 Competition amongst the telecom

companies is fierce and they are working
on declining ARPU
 The buyer has high bargaining power due
to low switching costs (MNP) and large
number of alternates with competing
quality available
 Barriers to entry are high/medium due to
huge capital investment involved coupled
with spectrum availability and licensing
issues
 Government policy and regulatory
changes ‘IP Telephony’ poses a great
threat to the GSM/ CDMA telecom
operators

Overall, based on the existing industry

structure and market forces, the Indian
telecom industry is NOT attractive.
SWOT Analysis of Jio

Opportunit
Strength Weakness Threat
y

Back up of Mobile Number

Reliance Group Portability Competition
Joint Ventures
High Brand
Value Market
Development
and Penetration
Strategic Regulatory
Alliances Approvals
Internet Data
Huge Customer Services
Base Turbulent
Market
Scenario MNP
Extensive Value Added
Infrastructure Services
 Entry of Reliance Jio - Background

Division of Reliance Empire in August 2013, India’s government changed

2005 with a ‘no compete rules and allowed companies to convert their
clause’ existing licenses into a unified license
Reliance Jio Infocomm Limited 
In Oct. 2013, Reliance Industries Ltd. Telecom
(RJIL): In 2010, Mukesh unit received a unified permit from India’s
acquired Infotel Broadband Department of Telecommunications to offer
Services, the only company to
telecommunications and related services.
bag pan-India spectrum
Until Aug. 2, 2013, India’s “Jio means to live and to be alive to every
telecom rules didn’t allow opportunity. World’s demand for digital oxygen,
Internet firms to provide voice that is data, is growing exponentially. Jio aims to
telecom services fulfil this need of Indians. Access to information
will now know no barriers,”
 Auctions of 4G spectrum

License granted to Infotel January 22, 2013, the company was renamed
Broadband Services Private
Limited (IBSPL), promoted
Reliance Jio Infocomm Limited.
by Anant Nahata, son of
Mahendra Nahata
IBSPL had entered the 4G auction
as an ISP (Internet Service
Extraordinary general meeting Provider), which is the licence
of its shareholders called at that remained in effect in its new
short notice, IBSPL raised its incarnation as Reliance Jio,
authorized share capital by Mukesh Ambani’s company
2,000 times, from Rs 3 crore to applied to the DoT for a “mobile
Rs 6,000 crore by issuing 75% of country code” and a “mobile
its shares to Reliance Industries network code”
Limited (RIL), a listed company
and India’s single biggest
corporate entity in the private
sector, making itself a
subsidiary of the latter.
Reaction to the Acquisition by CAG

 The director general (post & telecommunications) at the CAG’s office had
some sharp observations to make in his draft report: that IBSPL had not
declared its relationship with Reliance Industries as an associate or partner in
its application for participating in the auction for 4G spectrum when details
of all applications were disclosed on the website of the DoT on April 6, 2010.

 The draft report of the CAG prepared in 2013 did not mince words: “The DoT
failed to recognize the tell-tale sign of rigging of the auction right from [the]
beginning of the auction” in which a small ISP, Infotel Broadband Services Pvt
Ltd (IBSPL) emerged as the winner of pan-India broadband spectrum by paying
5,000 times of its net worth.
Strong Economics

 Superior Spectral efficiency

 No legacy systems
 Lowest capex per unit capacity
 Lowest operating cost per GB
 Bulk of network is already built-can support more
than 60%of forecasted 2020-21India data demand

Jio anticipates EBITA MARGIN>50% on gross

revenue
Reliance Jio Business Model:
Disruptive Pricing
RJio’s Welcome Offer
Business Logic
Unlimited Free Voice Calls
Sale of 4G Handsets
Jio Apps
Summary

 Voice revenue is shifting to data. Data Market in India is expected to 3Lakh Crore by FY 20-21
 400mn subscribers can afford to spend minimum Rs500 on digital services
 Jio caters 85% of mobile data traffic in India today
 Jio is India’s only 5Gready network
 Well positioned to achieve more than
 The Reliance Jio Master Plan – DIGITAL
INDIA Jio applications-
 Jio TV
 Undercut the Market Price by giving
attractive Discount  Jio Cinema

 Let everyone switch to Jio for internet use at  Jio Music

cheap rates  Jio Mags
 Unleash the power of fibre optic network to  Jio expressnews
give superfast internet  My jio
 Grow your subscriber base  Jio money
 Recover your investment using the large  Jio chat
number of users
 Jio security
The whole Master plan is based on single thing i.e  Jio net
Volume
 Jio4Gvoice
 Jio newspaper
 Jio cloud

Jio has best suite of applications with the most

comprehensive library of content ensuring stickiness of
customers
JIO: A Start-up With a PAN India
Umbrella of 4G Spectrum
Spectrum Holding of JIO in Various Telecom Ci
 Initial investment: Rs.1,50,000
crore, it is one of the largest green-
field digital initiatives
 Transformation In The Data
Consumption Habits: Digital India
 The voice segment of the telecom
market in India has reached the
saturation stage
 Jio strategized to hit the data
segment and came up with the focus
of digitizing India.

Source: Credit Analysis & Research Limited Report,

19 September 2016
Post Jio
 Data Explosion  Lowest data rates in the world
with the best experience
 Jio has created world record for
fastest 100mn acquisition  Truly free voice –Local, Roaming
off net
 Market expanded 6x with
introduction of Jio in less than 6  Worlds largest IP network
Months  Highest VoLTE traffic of 200cr mins
 After Jio base rate got highly per day
reduced to Rs25/GB  Created device ecosystem for 4G in
 Simple structure India
 No roaming charge in India  India has become most active
Market for Google and Facebook
 No unfair charges
 Only pay for one service
Strategic view and analysis

 Industry Analysis Vision-

 Porters 5 forces i. The best quality broadband
network with the highest capacity
 SWOT ANALYSIS
ii. A world of affordable cutting edge
 VALUE CHAIN ANALYSIS
device
 SEGMENTING TARGETING AND
iii. Compelling applications of content
POSITIONING
iv Superior digital service experiences
V. Affordable and simple tariffs
To conclude, it can be obtained that JIO has made its effect
on the market both on customers and the competitors the
young generation is the target customer majorly, other
people are making offers to either retain or add new
customers. Thus, it is very clear that the market is effected
by “Reliance JIO Effect”.