Product details

By continuing to use our site you consent to the use of cookies as described in our privacy policy unless you have disabled them.
You can change your cookie settings at any time but parts of our site will not function correctly without them.

Abstract

The case discusses how Reliance Jio disrupted the Indian telecom market by launching its mobile telephony and data services in September 2016. Jio was touted as an industry disrupter for its ridiculously low data prices and for doing away entirely with charges for domestic calls. The telecom major's offers was nothing short of audacious - unlimited free voice calls throughout the country and data priced cheap at INR50 per GB. Since the voice market was crowded, Jio planned to make its disruptive pricing strategy an attractive feature. In contrast, the incumbents generated a major chunk of their revenues from voice calls running on 2G networks. Experts appreciated Jio's strategy of focusing on the data market which remained hugely untapped and offered tremendous potential whereas the voice calls segment was highly saturated. Jio's pricing strategy sparked a tariff war, forcing incumbents such as Bharti Airtel (Airtel), Idea Cellular, and Vodafone to slash their own tariffs in a bid to maintain market share. In addition to its unique pricing proposition, Jio's 4G network was technologically more sophisticated than other players in the Indian telecom market. The telecom major's entire network and infrastructure was built from scratch with the latest technology and new infrastructure from leading telecom gear manufacturers. The company's huge digital infrastructure was designed to handle 5G and 6G. Analysts pointed out that Jio's efforts in launching a disruptive technology ensured high efficiency and better performance for its consumers compared to what was offered by traditional network operators. On the other hand, Airtel, Vodafone, and Idea Cellular were focusing on upgrading their existing technologies instead of investing in 4G or VoLTE since the mounting debt incurred by the telecom companies on the spectrum auction limited their ability to spend on core infrastructure. In addition to this, the network operators also faced several challenges such as frequent call drops, dodgy reception, and fluctuating internet speeds. Industry experts appreciated Jio for disrupting the Indian telecom market with its pricing strategies as the Indian consumers were price sensitive. They felt that Jio's disruptive price offers would compel Airtel, Idea Cellular, and Vodafone to cut call charges in a bid to maintain mid-to-high-end average revenue per user (ARPU) for retaining customers and securing their voice business. Some critics felt that Jio could lose its momentum once it started charging for its services. The major challenge for the company would be to retain its existing customers going forward. Despite analysts' skepticism over Jio making a huge mark in the Indian telecom market, Jio had ambitious plans of garnering a 50 percent share of the Indian mobile telephony market by 2021. Analysts at Goldman Sachs called Jio's target of achieving 50 percent market share 'aggressive' and said "Incumbent telcos were unlikely to lose a meaningful portion of their revenues" as they too had invested aggressively in building data networks. Analysts suggested that Jio should adopt strategies for becoming a game changer in the intensely competitive Indian telecom market rather than being a short-term disruptor. Some experts believed that Jio in future should continue with its disruptive product offerings and focus on retaining and increasing its subscriber base to make a mark in the rapidly growing mobile internet market in India. Some industry analysts suggested that Airtel should upgrade its network to cater to 4G services and focus on the data market in a bid to tackle competition from Jio and defend its market leadership position in the Indian telecom market.
Location:
Industry:
Size:
Very Large
Other setting(s):
2017-2018

About

Abstract

The case discusses how Reliance Jio disrupted the Indian telecom market by launching its mobile telephony and data services in September 2016. Jio was touted as an industry disrupter for its ridiculously low data prices and for doing away entirely with charges for domestic calls. The telecom major's offers was nothing short of audacious - unlimited free voice calls throughout the country and data priced cheap at INR50 per GB. Since the voice market was crowded, Jio planned to make its disruptive pricing strategy an attractive feature. In contrast, the incumbents generated a major chunk of their revenues from voice calls running on 2G networks. Experts appreciated Jio's strategy of focusing on the data market which remained hugely untapped and offered tremendous potential whereas the voice calls segment was highly saturated. Jio's pricing strategy sparked a tariff war, forcing incumbents such as Bharti Airtel (Airtel), Idea Cellular, and Vodafone to slash their own tariffs in a bid to maintain market share. In addition to its unique pricing proposition, Jio's 4G network was technologically more sophisticated than other players in the Indian telecom market. The telecom major's entire network and infrastructure was built from scratch with the latest technology and new infrastructure from leading telecom gear manufacturers. The company's huge digital infrastructure was designed to handle 5G and 6G. Analysts pointed out that Jio's efforts in launching a disruptive technology ensured high efficiency and better performance for its consumers compared to what was offered by traditional network operators. On the other hand, Airtel, Vodafone, and Idea Cellular were focusing on upgrading their existing technologies instead of investing in 4G or VoLTE since the mounting debt incurred by the telecom companies on the spectrum auction limited their ability to spend on core infrastructure. In addition to this, the network operators also faced several challenges such as frequent call drops, dodgy reception, and fluctuating internet speeds. Industry experts appreciated Jio for disrupting the Indian telecom market with its pricing strategies as the Indian consumers were price sensitive. They felt that Jio's disruptive price offers would compel Airtel, Idea Cellular, and Vodafone to cut call charges in a bid to maintain mid-to-high-end average revenue per user (ARPU) for retaining customers and securing their voice business. Some critics felt that Jio could lose its momentum once it started charging for its services. The major challenge for the company would be to retain its existing customers going forward. Despite analysts' skepticism over Jio making a huge mark in the Indian telecom market, Jio had ambitious plans of garnering a 50 percent share of the Indian mobile telephony market by 2021. Analysts at Goldman Sachs called Jio's target of achieving 50 percent market share 'aggressive' and said "Incumbent telcos were unlikely to lose a meaningful portion of their revenues" as they too had invested aggressively in building data networks. Analysts suggested that Jio should adopt strategies for becoming a game changer in the intensely competitive Indian telecom market rather than being a short-term disruptor. Some experts believed that Jio in future should continue with its disruptive product offerings and focus on retaining and increasing its subscriber base to make a mark in the rapidly growing mobile internet market in India. Some industry analysts suggested that Airtel should upgrade its network to cater to 4G services and focus on the data market in a bid to tackle competition from Jio and defend its market leadership position in the Indian telecom market.

Settings

Location:
Industry:
Size:
Very Large
Other setting(s):
2017-2018

Related