Reliance Jio 4G service offering is cracking the Indian Telecom sector due to their disruptive pricing model. Mukesh Ambani Reliance invest more than $25Bn to build state of art 4G network and successfully re-entered into Telecom sector. As an Reliance Group Strategy, it was expected that they will play pricing model to attract and retain new user and make them habitual of their services. They did the same and acquired more than 70 million user. It is still a big question mark that how many of those 70 million users are VLR active users. Reliance Mukesh Ambani extended free offer till 31st March 2017 to achieve their goal of reaching 100 million user goal in shortest span of time.
Reliance jio competitors such as Airtel, Idea, Vodafone observed the fall of ARPU across their service area and in turn government lost huge revenue out of it. Airtel questioned Reliance Jio policy of offering free service in Telecom tribunal and thus started playing pressure game to ensure that Reliance Jio start charging user. Unfortunately, Reliance Jio is pumping billions of $ to offer free service as they are not sure of outcome if they start charging user. Most of the Reliance Jio userbase are using their data and voice service like hot cake as it is not hurting their pocket.
Reliance jio competitor want those user to feel the pain of money outflow once Reliance Jio start charging them and thus using MNP to attract many of the user back to their fold as they already geared up for the same. It is also a known fact that once Reliance Jio announce charges, many of their userbase will completely stop using their services and thus will impact their userbase and potential revenue. It's easy to offer free to acquire user but it's difficult to charge those users who are habitual of free usages.
It will not be long before Reliance Jio will start charging and fall in adoption will also impact Reliance Share price. It may also impact their credit rating as they took huge debt on Reliance book in anticipation that their Telecom business will be super success.The Dilemma of Reliance jio is the biggest weakness of Reliance jio and may impact Reliance in big way.
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