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Reliance Jio Dilemma

Reliance Jio 4G service may hit the roadblocks very soon. Post huge user acquisition, based on the network speed test done by the authorities; network speed is slower than the competitors.

Reliance jio build their brand with guaranteed claim that their network speed is the best coupled with best quality of service and experience but on the contrary facing multiple issue related to lower speed to higher call drop.

Reliance jio deflected the whole issue to Incumbent operator and used point of interconnect as excuses to convince user to be with them.

Reliance jio will also face problem in converting the free user into paid user base. Based on the channel check most of their user base is low earning group looking for free content to calls and it is an indication that the ARPU of Reliance jio will be much lower than its peer.

As users are using the services in full throttle and will look to have bundled pricing offer in which they will expect the free voice call which will dent Reliance jio finance. Reliance jio initiated call which gets terminated on other networks runs in millions of call per for which Reliance jio will be liable to pay termination fee to Incumbent operators.

The net realization per MB of data in India is going down which will put pressure on Reliance jio revenue streams.

Some of the rating agencies predicting that Reliance Jio may achieve EBITA positive by 2018 but in my opinion it will not happen even in 2020 given the lower TAM of Smartphone market size.

Reliance strategy to force incumbent to play the pricing war backfired as Airtel categorically mentioned that they will prefer to wait and watch & will respond post Reliance release its own pricing model.

The challenges from multiple sides must be felt by Reliance Jio.  It's not important how many user any mobile operator command instead of that the whole focus should be on the quality paying user base.  In my point of view Reliance jio should learn from Reliance communications revenue growth.

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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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