01/03/2017
Jio - changing the face of Telecom business in India
Reliance Jio Infocomm. Limited, the company that caused waves of change in the telecom market of India after its launch in September 2016, continues to shape the business till date. Withing the first month of launching its services, Jio had gained 16 million subscribers. With offers never even dreamt by customers before, ranging from free voice call across the country to any telecom operator to unlimited internet until the next year, Jio created market for demands that weren’t even known to the customers before the company launched its services. The Ambani owned telecom company has caused its competitors, i.e. every single operator in the Indian wireless telecom business, to try desperately and stay afloat with the unbeatable competition. So much that the companies that were once competing in a cut throat competition against each other have sought to joining hands to battle their common enemy. Afterall, the art of war states that your enenmy’s enemies are your friends. A recent example of this comes from the rumors of UK’s Vodafone operating in the Indian market and Aditya Birla owned Idea cellular are to form a merger that would result in the largest telecom company in the Indian telecom market. The companies are to finalise their deal soon and an agreement will be signed from both the parties. Ahead of Vodafone merger, a lot of Idea’s shares are being auctioned and sold due to predictions of market instability, but that will not stop the two telecom giants from forming a pact. The results of the agreement are yet to see but the number of customers and shares that will be affected is a number too huge to play with. According to India Ratings and Reseach, the two companies when merged will form the biggest telecom company in India due to the following reasons – the telecom firm so created will have a revenue share of 40%, the proposed company will generate a revenue of Rs. 77,500 to 80,000 crores and the subscriber base will become a startling amount of 380 million. Though the two companies will have to pool in about 5,700 crore rupees for liberalising radiowaves that were allocated to each separately, the estimated profits are going to be much more than the temporarily incurred losses.
Another merger was followed by the Vodafone-Idea merger announcement. When these two ginats decided to form the largest telecom company, RCom and Tata Teleservices initiated talks to form a pact to become the third largest company after Vodafone-Idea and Airtel. The company will become a joint entity comprising of Tata Tele, RCom Aircel and MTS. The telecom merger will have a subscriber base of 260 million subscribers and 18% revenue share.
The future of wireless telecommunication industry of India solely depends on the outcomes of the success or failure of these tie ups and the extent to which Jio drives the telecom business.
