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Reliance Jio Revenue Model -Value Added Service & Mobile Advertisement

Reliance jio came out with mind blowing 16 million user acquisition within 30 days of their 4G service launch. It is clear that many users and that too from tier 2 and tier 3 cities got attracted towards Reliance Jio lucrative everything free offer. 

As we are well versed that India is a place where biggest marketing gimmick is discount N free combo do not need any promotion. That what happened with Reliance jio and were flooded with service activation request from user.

Even though Reliance Jio is facing call drop issue in the absence of sufficient point of connect but it is not affecting users as they think that whatever they are getting as free umis good enough. On a contrary,  Reliance is incurring cost for free voice and data. Till now the call drop used to be very high but as per the media reports, situation is improving and I am sure that major chunk of initiated call from Reliance will be getting terminated on Airtel Network. Reliance jio will be liable to pay 14 paisa per minute as termination charges to Airtel. Given the billions of calls getting generated from Reliance jio and it will have adverse impact on Reliance jio loss factor.

In my point of view, Reliance jio played very smart by creating the application ecosystem as well as VAS ecosystem. By acquiring as much as user, they are trying to convert their network as Ad network which is bad news for many domestic ad network. 

Reliance jio is also promoting it's device brand LYF so that he control the user indirectly and run campaigns through notification process and at the same time promote VAS services . Through their device brand they must be giving an access of its users to those application providers looking to acquire active user base.

Given the current trend with Reliance Jio service offerings, the above options must be giving them some breather financially. It would be interesting to see their financial result ending Dec 2016 to analyse Reliance jio service impact on their profitability. Any setback will hit their share price very badly.

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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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