Effect of Jio on Indian Telecom Industry Landscape

Indian telecom is a different ball game with Reliance Jio


Last 12 months have been challenging times for the Indian Telecom Industry as the launch of Jio has disrupted the existing telecom landscape in the country. Revenue models have been shattered, existing voice and data plans have gone down the drain, margins are narrowing and companies are bleeding with piling up license fee. Probably, no industry in country has seen such an exponential rise in penetration and simultaneous drop in revenues. Lets see the effect of Jio on Indian telecom industry landscape and how the numbers stack up pre and post launch of Reliance Jio 4G services in the country.

In a nutshell, as an effect of Jio on Indian Telecom Industry, the average use of data per subscriber per month has increased 5 times and stands at 1 GB per user per month. At the same time, the price of data has dropped a whooping 95% to currently Rs 11 per GB from Rs 192 per GB around 12 months back.

Effect of Jio on Indian Telecom Industry Landscape

Jio has grabbed 43 per cent of the mobile broadband subscriber market, more than the three incumbent telecom operators — Bharti Airtel, Vodafone and Idea Cellular — put together. Its customers use over 1.2 billion GB of data a month, 80 per cent of all the data consumed in the country.

The total data use in the country has risen from 200 million GB a month before Jio to 1.5 billion GB a month now, making India the world’s largest data user, overtaking the United States (710 million GB) and China (630 million GB). And this surge has come from only 282 million customers; China’s lower usage is spread across 800 million customers.

Effect of Jio on 4G/LTE and VoLTE Devices in India

At launch, Jio made sure that there was no dearth of 4G/LTE or VoLTE devices in the country by launching its own brand of compatible ‘LYF Smartphones‘. However, as global players started introducing 4G handsets, Reliance has intentionally made the LYF series take a back seat. Now Jio is more concerned about tapping the segment which cannot afford a smartphone by introducing low cost 4G feature phones for practically FREE for the consumer. The survival of a bunch of Indian brands will be at stake if the feature phones take off and will make Jio gain another 150-200 million customers.

Effect of Jio on Indian Telecom Landscape

Current Standing of Telecom Service Providers

Jio’s entry has led to consolidation in the Indian Telecom Industry with Vodafone and Idea to come together. Currently, there are 5 major telecom players in the country – Jio, Idea-Vodafone, Bharti Airtel and BSNL. The first 3 account for more than 90% market share. All other telecom players are merely surviving and on the verge of consolidation with bigger players. Both sales and profits have slumped year on year due to Jio launch.

Telecom Industry’s Unsustainable Debt

Amongst falling revenues and increasing costs of operations, marketing etc- have led to unsustainable levels of debt with almost all players in the Indian Telecom Industry. (Telecom industry’s debt at unsustainable level) Over and above this, the spectrum licensing costs have made all players bleed. Even leading bank of India, who are lenders to telecom companies, are now worried about their increased exposure in the telecom industry.

Undoubtedly, Jio has brought millions of smiles on the consumers face with freebies and unmatched data offers; but at the same time have left competition as well as regulators scratching their head. A vital question still remains unanswered – When will Jio break even considering the Rs 20,000 crore investment made of the Indian conglomerate?

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