Mobile services

RJio Effect: All Is Not Lost for India's Incumbents

Indian new entrant Reliance Jio launched services earlier this month with a bang by announcing one of the world's cheapest data plans and free-voice-for-life services. (See RJio 4G Launch Could Make Rivals Lose Their Voice.)

At the a recent annual general meeting of parent company Reliance Industries Ltd. (RIL) , Chairman and Managing Director Mukesh Ambani revealed details of pricing plans ranging from 149 Indian rupees ($2.2) to INR4,999 ($75.3) for 28 days.

This could be disastrous for India's existing operators, which still generate about 80% of their revenues from voice services. Those players need to come up with a plan to protect their turf.

"We believe that the incumbents will try to protect the exodus of their upwardly mobile subscribers, especially in metros and Tier 1 cities," says Javanth Kolla, a partner with analyst company Convergence Catalyst. "Groups, like corporate executives and students, would be high on their list because they are high consumers of data and are also seen as influencers.

"There are a lot of gaps in RJio's offerings since they have launched just three main tariff plans, so there is a lot of scope for the service providers to come up with aggressive tariff plans to prevent their subscribers from leaving the network," adds Kolla. "The fact that Jio's lowest plan of INR149 is more than the average ARPU [average revenue per user] of INR127 [$1.9] makes it easier for telcos to come up with offers which would appeal to their subscribers."

However, some experts believe that instead of countering Reliance Jio 's offer on tariffs, the big operators should leverage their key asset -- subscriber data. Companies like Bharti Airtel Ltd. (Mumbai: BHARTIARTL) and Vodafone India installed customer experience management (CEM) technology a long time ago, giving them greater insight into the consumption patterns of their customers. In principle, operators could use this information to develop more tailored offerings.

"The incumbents can take a leadership position," says Kolla. "They can also look at coming up with one-point solutions, which combine their DTH [direct to home TV], wireline and wireless services. That way they might be able to offer services to the entire household instead of having different members go for different service providers."

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So far, customers are not deserting the bigger operators in favor of RJio in large numbers. That contrasts with the last time Ambani launched a new telecom business under the Reliance Infocomm brand (that company is now Reliance Communications Ltd. and owned by Anil Ambani, Mukesh's brother), when the "Monsoon Hungama" promotion dramatically cut tariffs.

It is perhaps a sign of greater market maturity that -- while people want to acquire RJio SIMs -- they do not want to ditch their existing service providers. RJio's offer is clearly designed to appeal to low-end customers, but many consumers are keen on testing the new entrant's services before deserting their existing operators. They are acquiring Jio SIMs as secondary SIMs rather than primary ones.

The next two to three months are going to be critical for both RJio and the incumbents. While Jio will be going all out to acquire as many subscribers as possible, players like Bharti Airtel and Vodafone India will be thinking of new ways to retain their customers.

— Gagandeep Kaur, contributing editor, special to Light Reading

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