NEW DELHI: Reliance Jio unleashed another watershed moment in the Indian telecom sector’s history, much to chagrin of stalwart rivals like Airtel, Vodafone and Idea Cellular. Marking Reliance Industries Ltd’s 40th anniversary, its chairman Mukesh D Ambani on Friday announced the launch of an ‘effectively free’ 4G phone, hoping to scoop up a sizeable 500 million bottom-of-the-pyramid (read feature phones) market. The handset is priced zero; subscribers, however, have to plonk down a refundable deposit of Rs 1,500.
With free voice calls being the new normal, Jio sweetened the deal offering unlimited data for Rs 153 per month — or one-thirtieth of the existing tariffs. For the budget-minded, weekly or two-day packs start as low as 24 bucks.
Experts say this could be the turning point the telecom sector has been waiting for. Though incumbent players like Airtel and Idea-Vodafone amassed size with each having subscribers in excess of 300 million, telcos’ average revenue per user has been lacklustre and the promised shift from voice to data revenues never happened. But this changed with Jio’s entry last September, when it gave away free voice and data services for flat six months, significantly boosting the country’s data usage, making it the world’s largest data consumer now.
Of the 750 million mobile users, over 500 million currently use feature phones that are run on the congested 2G networks, making internet browsing harrowing despite availability of affordable data packs. Jio’s LTE feature phones, which ride on the cutting-edge 4G technology are seen as a game-changer and could finally help the sector break the voice-data revenue jinx.
But Jio’s new launch spells bad news for existing players, who already are mauled with its disruptive entry wiping off profits, and with smaller operators like Tata Teleservices, Reliance Communications and Aircel losing significant market share. To fight the onslaught, telcos huddled together merging operations and the aggressive consolidation meant the number of players reduced from 13 to roughly 5 now.