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Who wins the Wireless game between Jio and Airtel:

Few of our readers have been requesting about business analysis on Jio and Airtel for the past one month. My apologies for the delay. Hope you would enjoy the analysis. Who wins the wireless game in India? I would say the game is for the first place as no one can vanish others. However, Vodafone and Idea will have big impact on their business rather than Airtel.

Indian telecom Industry:

India is the second largest telecom consumer market in the world, it has substantial impact on Indian GDP. Based on the survey by international Data Corporation (IDC)India overtake USA in Smartphone market by 2017. Experts prediction says that the revenue of mobile service market would touch $37 billion by 2017.

Why does telecom business is hard to crack?

Well,

1. What are the things we buy repeatedly? I would say groceries and vegetables.
2. What are the things once in lifetime? I didn’t get any, did you? Nothing is permanent.
3. What are the things periodically? May be apparels & home appliances.
4. What are the things we buy when the existing one got messed up? Electronic goods.

Buying a wireless connection falls in which of the above categories? May be  2&3. Do you agree? It is very important to discuss about typical Indian customer. Wireless connection is a basic need today, it is no more luxury as prepaid recharge coupons are available from 10 INR. Consequently, majority of the people would love to stick to their phone numbers.

However, what are the reasons would provoke typical Indian customers to switch to other service provider?

1.Great deal on mobile data:

See the growth in mobile data usage statistics

India is getting transformed, mobile data/ mobile internet is being used badly. For instance, My father is 61 year old, he is pretty busy with his smart phone by using Facebook and WhatsApp  Eventually, a deal on mobile data is going to be a good option to grab subscriber base.

2.Free talk time:

Every subscriber is going to enjoy free talk time.

3.Free SMS:

I believe this service is almost took over by WhatsApp, I don’t think it will have an impact on customers.

Reliance Jio offered the same with some additional features as a welcome offer to grab the market as much as possible.

Million dollar question is: Who turns to be a Reliance Jio subscriber to utilize these services? A subscriber of other service provider? OR brand new customer? I would say 20% to 30% of subscribers of other service provider and 70-80% of brand new customers. How do we know the number of brand new customers?

Here is the customer growth quarter on quarter

Basedon the above chart average wireless subscriber growth per quarter is 14 milliom approximately. For instance, if 70% of 14 million people subscribe Reliance jio wireless per quarter, it is going to be 19 million subscriber base with Reliance Jio by March 2017.

How many people would stay with Jio:

One more million dollar question: Majority of the subscribers of other service provider have been picking up Reliance Jio to enjoy the welcome offer with 4G data. To my knowledge once the offer is expired they may just recharge with minimum top up or just will leave as is. Well, the brand new subscribers of 19 million approx. may stay with Reliance Jio.

Threats for Reliance Jio:

Market is saturated:

As I described earlier telecom market is saturated. Apparently, it takes a lot to make good business for Reliance Jio and need huge subscriber base either.

Impact of technology trends:

Technology up-gradation needs big investment every time as 5G is approaching very shortly. With in no time we got upgraded from 2G->3G->4G.

Highly competitive market:

Airtel, Vodafone, Idea have already been established in the market. It is not an easy game to win. Reliance Jio has to mitigate call drop outs because it has a big impact to grab customers regardless of welcome offer.

Threats for Airtel:

• Highly competitive market.
• Mobile number portability (MNP), existing number can be switched to any other network
• Government compliance.

Take Away:

1. Wireless telecom industry is saturated to grab for Reliance Jio.
2. How loyal the customers are once the welcome offer is expired?
3. It wouldn’t have been a big game if Jio is not from Reliance.
4. I would say Idea and Vodafone has more impact than Airtel.
5. Reliance would certainly succeed to grab some customer base. However, may not as good as Airtel.
6. However, customers will have advantage because of two strong rivals in the business.

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