We live in extraordinary times when the world is at the dawn of a digital revolution. The emergence of disruptive technologies such as Artificial Intelligence, Machine Learning, SMAC and Internet of Things (IoT) is reshaping human civilization in a fundamental way while posing major challenges to businesses in terms of innovation and rescaling, developing new age products and solutions, partnering and creating value for the customers and most importantly survive the technological storm. Every industry, be it manufacturing, retail, healthcare, education, entertainment, is going digital, embracing the rapidly evolving technologies not just to continue being relevant and avoid obsolescence but also to capture the market and seize opportunities offered by the transformation.
The Indian Telecommunication sector which has its own history of disruptive innovations is no exception. Whether it is the emergence of revenue killer over-the-top messaging apps, big data and GPS-based free services, cut-throat price per second tariff plans, shifting of business model from voice to data, the USD 37 Billion industry has seen it all.
The number of telephone subscribers in India increased from 1,123.96 million at the end of November 2016 to 1,151.78 million at the end of December 2016 – a monthly growth rate of 2.48 percent, data released by the Telecom Regulatory Authority of India (TRAI) said. The urban subscription increased from 659.03 million at the end of November 2016 to 683.14 million at the end of December 2016, and the rural subscription also increased from 464.93 million to 468.64 million during the same period. The overall tele-density in India increased from 87.81 at the end of November 2016 to 89.90 at the end of December 2016. Total wireless subscriber base increased from 1,099.51 million at the end of November 2016 to 1,127.37 million at the end of December 2016, thereby registering a monthly growth rate of 2.53 percent. The wireless tele-density in India increased from 85.90 at the end of November 16 to 88.00 at the end of December 2016. The wireline subscriber base declined from 24.44 million at the end of November 2016 to 24.40 million at the end of December 2016, the data revealed. During the month of December 2016, a total of 5.67 million requests were received for mobile number portability. As per the reports received from the service providers, the number of broadband subscribers increased from 218.27 million at the end of November 2016 to 236.09 million at the end of December 2016, with a monthly growth rate of 8.17 percent.
Dual SIM phenomena
Both industry experts were of the opinion that Reliance Jio has impacted tele-density in ‘a huge way,’ giving further impetus to the ‘dual-SIM’ or ‘multiple SIM’ phenomena in the urban areas. “Most of the 10 crore subscriber base of RJio already had SIMs from other operators prior to September 2016. They have managed to gain traction with their offers and it will be a key watch event once they start charging customers after March,” Care Ratings analyst Dixit said. During this quarter (September-December), the total subscriber addition for the industry was 77.6 million out of which RJio subscriber addition stood at 56.2 million. It is likely that most of RJio subscribers are dual-sim users.
Consolidation to help telecoms focus on rural networking
Disruption in the telecom market by new entrant Reliance Jio has given rise to mergers and acquisitions and soon the industry will have four strong entities with Airtel-Telenor, Idea-Vodafone and Aircel-Reliance Communications and Reliance Jio.
Commenting on consolidation Dixit said, “This is most likely to end the price wars amongst the telecom operators and will bring back some amount of normalcy in the market. The operators will then be able to reach out to rural areas for new subscriber acquisition where their attention is needed most.” Seeing as how India has a potentially untapped market hidden in the rural areas he added, “This rural tele-density of around 50% should reach 65-70% in the next two to three years.”
Changes caused by Jio
The industry in 2016, apart from the spectrum auction, witnessed one of its most significant developments in years, the entry of Reliance Jio which created a flutter in the market literally setting the cat among the pigeons! The Mukesh Ambani led firm has rewritten the rules of the game by offering free voice calls and roaming, a suite of multimedia apps as well as dirt cheap data connectivity coupled with affordable 4G handsets which in turn has forced the incumbent operators such as Airtel, Vodafone, Idea to change their whole perspective, cut outrageously overpriced data and voice tariff to stay relevant and competitive.
The tremor caused by Jio’s larger than life launch can be well understood by the fact that within 45 minutes speech of Mukesh Ambani industry leader Bharti Airtel, Idea Cellular and Reliance Communications lost a combined Rs. 13,165.5 crore in market value while RIL’s own share price fell by 2.7% as investors were uncertain of sustainable revenue model, bleeding of the sector given the aggressive price war and huge operating losses for Reliance in the near and medium term postponing break-even timelines. The launch which has sent a shiver down the spines of the dominant players has also set the stage for the long-awaited sector consolidation and strategic alliances. Vodafone and Idea Cellular which reported a net loss of Rs. 385.6 crore for the third quarter of the current fiscal have publicly confessed that they are very much in love and may tie the knot soon!
What differentiates Jio from its peers?
- Loss Leader strategy – Offering free voice calls for a lifetime, nil roaming charges and a wide portfolio of apps; charges consumers only for data usage under super competitive plans.
- Largest 4G network ever – Over 100 Mn subscribers across 18,000+ towns and cities and 2 Lakhs villages. Plans to reach 90% of India’s population by March 2017. Moreover, Jio is the only company with Pan India 4G coverage.
- Wide range of affordable 4G VOLTE smartphones under its “LYF” brand.
- The “Data Sachet” strategy – cheapest data plan is available for Rs. 19 a day.
- No blackout days i.e. Jio won’t raise the tariff on special occasions and festivals.
- Reliance Jio digital start-up fund with a corpus of Rs. 5,000 Crore to boost entrepreneurship and develop an ecosystem around Jio platform.
- Deep Pockets – Reliance Jio is planning a further investment of Rs. 30, 000 crore to expand coverage and capacity which will take the total investment close to Rs. 1,90,000 crores.
- Walking out working – Aadhar based instant SIM activation at Reliance Digital and Xpress Mini store.
- Look beyond telecom – Jio doesn’t want to be tagged as just another telecom player and has bigger plans up its sleeve. The company is working towards developing full-fledged IoT solutions in the automobile and home automation space as well as lapp-based cab service.