Back to the days of telecom war, Jio rolls out, though for a select few initially

On the eve of Reliance Industries founder chairman Dhirubhai Ambani's 83rd birthday anniversary on December 28, Reliance Jio Infocomm launched its much-awaited and much-hyped 4G service, although only for its vendors, business partners, employees and their families, setting the stage for an intense battle among Reliance Jio, Bharti Airtel, Vodafone India and Idea Cellular for a significant pie of India's USD 50 billion telecom industry.

The oil-to-yarn and retail conglomerate inched a step closer to realising its ambition of becoming a leading telecom player in the country with the roll out of 4G services. Reliance Jio is expected to begin the commercial roll-out of the service from March-April 2016. The company is initially offering its 4G services to its lakh plus employees, as this would help the company in carrying out appropriate test runs and technology augmentation of its network capabilities thus, ensuring a smooth pan-India commercial launch at a later stage. Reliance Jio will offer 4G LTE (Long Term Evolution) connectivity for data and voice, currently the fastest and latest generation of cellphone network coverage. Interestingly, Jio will not return to older technologies like 3G or 2G.

Reliance Jio holds the biggest chunk of liberalised spectrum among telecom operators in India, which can be used for deploying any technology for mobile services. Reliance Jio is not going to be a mere provider of mobile broadband and voice network. It aims to offer users a complete digital experience by bundling in content with the connection and enabling digital services, including in the fields of financial services, health care and education. Reliance Jio has also partnered with State Bank of India for the payment bank services which would be launched in next fiscal. The company is working on its digital money and digital payment business strategies and Jio Money will try and provide secure, digital payments in India, claims company officials. 

Reliance has invested close to USD 15 billion in its new digital business so far and is banking on high volumes in subscriber base and data traffic to drive revenues and profitability. Reliance Jio has set itself an ambitious target of reaching 100 million users in the first year of its launch, considering the fact that it’s 4G services is already delayed by a quarter compared to incumbents.

India will emerge as a leading player in the virtual world by having 700 million internet users of the 4.7 billion global users by 2025, as per a Microsoft report. Internet is expected to penetrate into the lives of a billion Indians in the coming decade from a current low online penetration. Reliance Jio’s prime target is data customers which will grow exponentially. All the companies will like to grab a market share of this burgeoning data boom by offering steep discounts and offers and which in turn would have a negative impact on the P&L and balance sheets. Data revenue would account for a major chunk of revenue whereas voice revenue would be minimal.

Telecom is the sector which will be keenly watched as all the players would clash for revenue market share from over a billion subscriber base. Companies are likely to actively participate in the next round of auctions which will take place in early 2016. It would be a high stakes battle as government is likely to offer more spectrum in the auctions. Deal making will also rise as small players would find it very difficult to survive in this intensive competitive environment.