Can Reliance Jio Disrupt Telecom Market in India with its launch?

There are lots of talk on success of Reliance Jio, the dream project of Mukesh Ambani – can he achieve the success he is looking for?

In the second week of August, 2014 Jio joined COAI as core member. The GSM lobby which works under COAI was having tussle with Jio previously in several matters including testing of mobile numbers, spectrum allocation etc. Whatever it was it seems it’s alright now between Jio & GSM lobby (mostly A-Vo-Id group).

After Jio joined COAI many analysts started spreading the speculation that Jio may not come up with tariff war which could disrupt the market.

Joining GSM lobby does not mean Jio can not bring disruptive marketing strategy. COAI member Uninor, the telecom arm of Telenor has its own strategy – ‘Sabse Sasta’ (= cheapest among all). If Uninor can do that there is no problem for Jio to bring super cheap data offerings. But one thing is clear that Jio is not looking CDMA this time.

American brokerage firm Morgan Stanley predicted that Jio’s threat to other players is overhyped and it could take minimum 7-8 years to be profitable if compared to American & European 4G operators. Jio, definitely has some issues – choosing LTE-TDD, having spectrum on 2300Mhz band, no existing 2G/3G network. But Jio, keeping its moves under the veil may misdirect the Analysts.

In response Jio told, “Our business model, which is at the intersect of telecom, web and media, emphasised on creating an enabling ecosystem and size and scale that is unique and not easily comparable,”

Swiss firm Credit Sussie goes in contrast with Morgan Stanley; says, market leader Airtel to under-perform when Jio comes with 4G voice & data.

With Reliance Jio’s commercial launch still at least an quarter away, I believe Airtel, Vodafone & Idea will go for another round of tariff hike and Reliance, Tata Docomo, BSNL and Aircel will blindly follow them. This tariff hike will help incumbents to make a good positive margin in their revenue sheets. Once Jio comes, they have to lower down tariff or opt for a new strategy to stay afloat in the competition.

And our readers will keep asking when Reliance Jio is launching. To them I would say wait & watch, something big is coming.