Jio has changed the game for everyone
Reliance Jio seems to be in a tricky situation.
The company that captured a market of 120 million customers in a matter of months is now is facing the repercussions of trying to win loyalty by offering freebies. What began with free data and calls for customers slowly turned into cheaper Prime offers and has now come to cash-backs.
Despite all the luring offers, things are proving difficult for them. According to reports, Jio has managed to lure in only 72 million customers for the Jio Prime membership offer.
Continuing with their unsustainable model of cut-throat offers, Reliance Jio recently announced a "Summer Surprise" offer, which offers 100GB of data as complimentary benefit. Jio - whose desperation is clearly visible now - also extended its enrolment for paid Prime scheme by 15 days.
Prime prepaid customers opting for Jio's Rs 999 recharge pack will get 100GB of free data for 90 days under the Summer Surprise offer. After July, under the Rs 999 pack, Prime members will recieve 60GB of data for 60 days.
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| Photo: Indiatoday.in |
Jio is bleeding the industry
Jio has been a game-changer, if not for the customers, then at least for the telecom industry. Thanks to its predatory pricing, all the big players (Airtel, Idea, Vodafone) in the industry have been dragged into a price-war that the industry had avoided thus far. As a direct result of this the Rs 26,000 crore mobile virtual network operator (MVNO) market can take a serious hit, according to analysts and industry experts.
“The dynamics for the MVNO industry could change with Jio’s ultra-affordable pricing impact, and with the number of telcos also likely to fall with the current wave of consolidation, the parenting landscape for VNOs might shrink as there will be fewer telecom operators,” said Amitabh Singhal, the director of Telxess Consulting Services, in an interview with the Economic Times.
According to EY’s global telecom leader Prashant Singhal mobile data revenue growth in the telecom companies has been affected due to a slashed data rates, something that was adopted by all telecom giants post Jio’s entry into the market. According to the ET report, the March quarter could be worse than the December quarter for the telecom industry, something that was already pretty bad. According to CRISIL, March quarter revenues for the four listed players will fall by 10 per cent year-on-year as compared to the five per cent year-on-year fall in the December quarter.
The telecom sector has a debt of Rs 4.42 lakh crore, while its revenue is only about Rs 2.11 lakh crore. While there are various factors that have led to poor financial health of the industry (low revenue, high taxes, huge investments on spectrum etc), it is the short-sightedness of TRAI that has been the cause of concern.
TRAI, in its zeal to while being lenient on a seemingly benign Reliance Jio, went against the basic spirit of the TRAI Act, something that was created to “protect the interests of the service providers and consumer of the telecom sector, to promote and ensure orderly growth of the telecom sector.”
The decision to allow Reliance Jio to offer free promotional tariff for more than 200 days (much more than the usual 90-day limit) is what will be looked back upon as a big regret.
A sick industry will hurt us
And while the price-war set off by Reliance Jio’s entry into the market looks heaven-sent for consumers, it is unlikely to last.
Firstly, the market at some point is likely to regularise itself and correct this imbalance ushered in by the Mukesh Ambani led group. But even before that there lies a bigger concern. A poorly functioning telecom industry will result in poor services for consumers all around. And when one looks at the preset debt situation, it becomes all the more worrisome.
Jio may look like a success story at first glance, but it is only the happy-go-lucky first act of a horror movie. The company, which itself is not managing to make a dent big enough, is perhaps going to become the one that will take everyone down along with itself. Jio’s tactics need to come under some kind of check lest we all happily choose to suffer in what is slowly turning into a sickly industry.