Entry of Reliance Jio
Entry of Reliance Jio
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The announcement made by Mukesh Ambani, the Chairman and Managing Director of Gupta are Associate
Reliance Industries Limited (RIL), about the launch of Reliance Jio[1] at the company’s 41st Professors, all at the
Annual General Meeting (AGM) (Reliance Industries, 2017) in June 2015 sent shockwaves Institute of Management
across the telecom industry. Although many analysts were confident that Jio would be a Technology, Ghaziabad,
flop show, some predicted that the offerings provided by Reliance Jio, which included data India.
and voice services at nearly half the current prices, would quickly eat into the customer
base that big players such as Airtel, Vodafone and Idea had built over the years (The
Economic Times, 2017a).
Everyone, including the customers, competitors and the entire telecom sector, was keen to
know whether Reliance Jio would be able to make a dent or fizzle like a weak firecracker.
Was it time for the top players to be worried and pull their socks up or will it be an
inconsequential ripple in the ocean?
At the AGM on December 08, 2015, five months after the announcement of Reliance Jio, Mr
Sunil Bharti Mittal, Founder and Chairman of Bharti Enterprises, the man behind Airtel, in an
interview with Business Insider said that Airtel is concerned about all kinds of competition
and will take it up very seriously, be it Idea, Vodafone or Jio (Business Insider, 2017). He
could not have been more right, as on March 2017, Reliance Jio was already making news
for all the right reasons. It has gained substantial customer base, something that other
companies took years to achieve.
DOI 10.1108/EEMCS-07-2017-0167 VOL. 8 NO. 3 2018, pp. 1-17, © Emerald Publishing Limited, ISSN 2045-0621 EMERALD EMERGING MARKETS CASE STUDIES PAGE 1
Reliance Industries Limited (RIL)
Mukesh Ambani, the eldest son of late Dhirubhai Ambani, is the current Chairman and
Managing Director of Reliance Industries Limited (RIL). RIL is an Indian conglomerate,
headquartered in Mumbai, India. As of February 2016, Reliance was the most profitable
company in India, outstripping Oil and Natural Gas Corporation (ONGC), Tata Consultancy
Services (TCS) and Housing Development Finance Corporation (HDFC) (Money Control,
2017). RIL was one of the seven Indian companies that have made it to the Fortune Global
500 list. Among those seven, RIL occupied the top position among the private sector firms
with a rank of 215, followed by Tata Motors and Rajesh Exports (Fortune Global 500, 2017).
RIL has businesses in many areas such as Exploration and Production, Textiles, Global
Corporate Security (GCS), Telecom, Petroleum Refining & Marketing, Petrochemicals and
Retail.
presence both in the domestic and global market. Reliance began the E&P business by
entering into a 30 per cent partnership with British Gas and ONGC. This unincorporated
joint venture was operated in the Panna Mukta and mid and south Tapti blocks (RIL.com,
2017a). Besides these, their domestic portfolio comprises five oil and gas blocks in basins,
such as Cauvery Palar, Cambay Basin, etc., and methane block coal beds. The company
even started its operation overseas, as in Myanmar, Reliance acquired two offshore blocks.
Reliance also entered into three joint ventures with the Marcellus and Eagle Ford for the
production of oil and gas in India and for Shale Gas in the USA.
Petrochemicals
The focus of Reliance’s Petrochemicals division has been on developing world-class
products, and thus making India the largest producer of polyester fiber in the world
(RIL.com, 2017d). The company also gives credit to the research and development
department and IT services for achieving such a mammoth feat.
Textiles
The textile division, like other divisions of Reliance, also has many achievements under its
belt. The textile division at Naroda, which is a manufacturing plant, has been recognized by
the World Bank (RIL.com, 2017e). The Company’s flagship brand Vimal is one of the oldest
and most trusted brands across India. Reliance has businesses not only in India but also
in 58 nations across the globe.
Reliance communications
The Reliance Group ventured in the telecom sector with the name Reliance
Communications (RCom). It is the flagship company of the Anil Dhirubhai Ambani Group of
companies and was established in the year 2002. It is the leading company of the group,
and the third largest business group in India. Further, it is one of the largest private sector
companies in the information and communication sector with a subscriber base of 118
million, which includes more than 2.6 million subscribers in the overseas. It offers integrated
(including both wireless and wireline) and convergent (voice calls, internet data, and
videos) services through Code Division Multiple Access (CDMA) and Global System for
Mobile (GSM) networks across the country. The company also offers various telecom
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services that include broadband, direct-to-home (DTH) and international calling facilities
(Business-standard.com, 2017). These services being supported by a nation-wide fiber
optic network and infrastructure made RCom the first telecom operator to provide pan-India
GSM and CDMA facilities along with a mobile platform, Rworld.
RCom was initially a part of the Reliance Industries started by Dhirubhai Ambani. However,
after the death of Dhirubhai Ambani, the group witnessed a split in 2006 between the
brothers Mukesh Ambani and Anil Ambani. As a result, Anil Ambani received business
related to telecom, power, entertainment and financial services, whereas Mukesh Ambani
got petrochemical, gas, oil refining and textiles. In addition, there was an agreement that
both the brothers would not venture into each other’s sector. Therefore, this split brought
RCom (earlier managed by Mukesh Ambani) under the new Anil Dhirubhai Group
(Business-standard.com, 2017).
have even better network facilities, Jio shared its own network capabilities while requesting
access to Airtel’s dedicated fiber I2I submarine cable that links India and Singapore (from
April 2013) (COAI, 2015). Further, Jio entered into an agreement with RCom for sharing
their extensive fiber optic network that spanned approximately 120,000 km of optic fiber in
April 2013, approximately 500,000 km of optic fiber in April 2014, and 45,000 towers in June
2013.
Reliance with 9.91 per cent of the total subscription occupies the fourth position (India
Brand Equity Foundation, 2017). (See Exhibit 3 for competitors’ per cent market share).
The market share has been a surprise, as before the advent of Reliance Jio in the telecom
industry, the market shares of the competitors were somewhat similar. As of February 2014,
Airtel had the highest market share of 22.53 per cent followed by Vodafone at 18.19 per
cent, Idea at 14.78 per cent, Reliance Communications at 13.05 per cent and BSNL at 10.5
per cent. These top five companies account for more than 79 per cent of market share.
Listed below is a brief profile of the three major competitors of Jio before its launch:
₹ 2,000 to 3,000. Given the affordable prices of the smartphones, they cater to a huge
customer base including those that are cost conscious.
Road ahead
The era of paying for voice calls is ending. No Jio customer will ever have to pay for voice
calls again. Jio will give the “power of data” to each Indian to fulfill every dream and to
collectively take India to global digital leadership. Mukesh Ambani
(Epaperbeta.timesofindia.com, 2017).
From June 2015, the details about Jio’s 4G services were unveiled until today, and there
have been a lot of changes that have taken place in the telecom sector. With the virtual
merger between the two Ambani brothers, the complete Reliance Group is now behind Jio
(The Economic Times, 2016). This has triggered talks about merger between Idea and
Vodafone in India (The Economic Times, 2017c). This can have a huge impact on Jio and
the telecom sector in general. The profitability factor that was earlier determined on the
average revenue per user (ARPU) will continue to dominate. The companies will be looking
at the different ways and means to increase the ARPU to maximize the returns. This would
also downsize the cost in such a way that their operations do not suffer and the downsizing
does not affect profit negatively.
Samsung and Jio recently won “Best Mobile Innovation for Emerging Markets” award and
their strategic partnership’s focus is to make India digital with the world’s lowest data rates
across towns and rural areas. They plan to achieve the same by deploying one of the
world’s largest Greenfield LTE network in India (RIL.com, 2017h). Airtel spokesperson said
that the company is unfazed by Jio and its strategies. Gopal Vittal, CEO, in a recent
interview said that, “Airtel is used to brutal competition, it does not faze us.”
(ETTelecom.com, 2017).
These tumultuous changes in the telecom sector have not only created havoc in the
operational aspects of telecom operators but have also affected the strategic marketing
communication of these operators. The advent of Jio has brought about a radical change
in the scope of marketing communication from the channels used to implement strategies
Keywords:
adapted to the responsibilities attached to it.
Marketing,
Amidst these changes, one thing is certain: Reliance Jio has created a storm in the Consumer behaviour,
telecommunication sector in India. Now, it is only a matter of time, which will tell who will Marketing strategy/methods,
come victorious out of this storm. Brand management/equity
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Table EI
Free sim card
Calls Unlimited
High-speed data (4G data) Unlimited
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Messages Unlimited
JIO App usage Unlimited
Validity December 31, 2016
JIO Happy New Year Offer
Free sim card
Calls Unlimited
High-speed data (4G data) 1 GB/per day
Slow-speed data Speed of 284 kbps post completion of high-speed data
Messages Unlimited
JIO App usage Unlimited
Validity January 1, 2017 to March 31, 2017
Table EII
₹19 ₹129 ₹149 ₹299 ₹499 ₹999 ₹1499
JIO tariff
Voice calls free (unlimited ✓ ✓ ✓ ✓ ✓ ✓ ✓
local, STD and roaming)
4G internet data 0.1 GB⫹ 0.75 GB⫹ 0.3 GB⫹ 2 GB⫹ 4 GB⫹ 20 GB⫹
Unlimited data Unlimited data Unlimited data Unlimited data Unlimited data Unlimited data
during the during the during the during the during the during the
Night Night Night Night Night Night
Exhibit 2. Prepaid tariffs
Table EIII
Name Market share (IBEF, 2017) (%)
Corresponding author
Dr Bikramjit Rishi can be contacted at: brishi@imt.edu
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