Indeed, it is fair to say that, till RJio showed the way, few thought the 2G customers could have been made to trade up.Raising more than Rs 150,000 crore in a period of just 13 weeks, as Reliance Industries chairman Mukesh Ambani said at the firm’s AGM on Wednesday, is not just an Indian record, it may even be a global one. What is even more impressive is how, over just a few years, RJio stormed the telecom market and, as a result, its enterprise value is greater than that of Reliance’s traditional business. RJio’s progress hasn’t been without its share of controversies, such as the allegations of predatory pricing and the Trai prematurely fining the older telcos for not providing it points of interconnection fast enough. But, there can be little doubt that while the older telcos were quite comfortable in their operations, it was the newcomer RJio that really shook up the market. While the incumbents charged users for each SMS and call, it was RJio that brought in the buffet-style all-you-can-eat model that is the industry standard today.
And, while the older telcos didn’t quite know how to migrate their lower-paying 2G customers to the more efficient, but more costly 4G networks—4G-enabled phones cost a lot more than the older generation mobile phones—it was RJio that came up with the Jiophone that allowed this; while the older telcos tried to offer some discounts on low-cost smartphones to match RJio, this didn’t quite cut it. Apart from getting the customers to pay more as they moved to 4G networks where they would consume more bandwidth, the subsidised-phone-led-strategy would also have been more efficient as this would have freed up the valuable 900MHz spectrum.
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Indeed, it is fair to say that, till RJio showed the way, few thought the 2G customers could have been made to trade up. If RJio is able to, with Google’s help—that is the highlight of Google’s $4.5 bn investment—create a low-cost but efficient smartphone, the 250-300 million people still on 2G networks can also be persuaded to migrate to 4G. Given RJio’s average revenues per user (ARPU) are lower than Bharti Airtel’s, this will be a big help.
Whether RJio can capture other markets as easily—it has 16% more customers than Bharti Airtel—remains to be seen, though its acquisitions/partnerships in this space suggest this is what it hopes to do. Jio Health Hub, for instance, is aimed at helping doctors set up online clinics and, in the education space, it bought Embibe which is an
AI-enabled platform for competitive exam preparation. In a research note on Reliance’s prospects, analysts at Credit Suisse point out that Alibaba’s health venture has a market capitalisation of $38 bn and, in the case of education, Byju’s in India is worth around $10.5 bn right now.
Given the power of these sectors to transform India, it is critical that the government does whatever needs to be done to ensure there are no hurdles to private sector participation. Indeed, for the sectors to be vibrant, there has to be as much competition as possible. That means, for instance, regulators like Trai that have played a big role in holding back the sector—Trai has ensured that, for instance, spectrum prices have been driven through the roof—have to be read the riot act, and the fact that protection of the competitive impulse is their primary duty has to be reinforced. In the case of sectors like retail—this is a big growth area for Indian retailers like Reliance—you cannot have a situation where there are different rules for online and offline retail, and for Indian and foreign players. Rules on data capture and sharing, including the prevention of data monopolies, similarly, need to be put in place quickly and spelt out unambiguously. China created champions by blocking global players, but that is not the Indian way.
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Reliance changed telecom, will Google help do it again? - The Financial Express
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