India’s telecom sector will never be the same again. Reliance Industries chairman Mukesh Ambani sent the telecom space in a whirlpool of optimism and confusion on Thursday when he unleashed Reliance Jio 4G service, offering free voice calls and zero roaming charges to its customers. “Jio’s 4G network covers 18,000 cities and towns, and over 2 lakh villages. By March 2017, we will cover 90 per cent of India’s population. It will be the largest 4G network,” he said at the company’s 42nd AGM in Mumbai.
Offering the world’s cheapest data, Ambani took his rivals head-on by announcing free services on Jio network for four months beginning on September 5, initially in Mumbai and Delhi.
As per the plan, voice calling will be free on Jio phones for life and post December 31, 10 data plans will be offered starting at Rs19 a day for occasional users, Rs149 a month for low data users and Rs4,999 a month for heavy data users.
The much-hyped launch of the Reliance Jio sent the telecom space in a tizzy and stocks of Airtel and Idea Cellular plunged heavily on the bourses. While Idea tanked 9 per cent to Rs85, its 52-week low on BSE, shares of Bharti Airtel dropped 8.99 per cent to Rs302. The overall market capitalisation of both companies went down by Rs12,000 crore.
Ironically while Ambani celebrated the launch of his dream project, which marks his shifts from Oil sector to telecom space, the shareholders of the Reliance Industries gave thumbs down to the Reliance Jio, fearing it could bleed the parent company.
Announcing historic and revolutionary concept for data users in the country, Ambani said, “Jio is meant for the young, by the young, of the young.” Defining the meaning of Jio, he said, “Jio means ‘to live’, which needs oxygen to live all the way, and Jio will give that oxygen for life to my users.” Reliance Jio will make its debut on September 5.
Along with free voice calls and free national roaming, Reliance Jio also offers rock-bottom data prices. The launch was expected in the month of April this year, but due to technical issues, it was delayed and shifted to September as announced by the Reliance Chairman on Thursday with non-stop deliberation of over 90-minute-long speech at the AGM.
Dedicating Reliance Jio to realising Prime Minister Narendra Modi’s vision for the “Digital India” initiative for over 1.2 billion Indians, Ambani said, “India is ranked 155th in mobile broadband Internet access among 230 countries and with the launch of Jio, India’s rank will be among the top 10.”
“Customers should pay for only one service, either voice or data. Not the both. The era of paying for voice calls is ending,” Ambani said, adding that no Jio customer will ever have to pay for voice calls again.
He also announced that there will be no national roaming charges for Jio users. For data, he set an aggressive rate of 5 paisa per MB or Rs50 per GB. “And the more data you use, the lower the rate. The data packs available in the market have an effective rate of about Rs250 per GB. With Jio, you pay 5 to 10 times lower — Rs 25-50 per GB depending on your data usage,” he said, setting a target of 100 million customers in the shortest time possible.
Encouraging students, Ambani also announced a 25 per cent more data for them, 1 million Wi-Fi hotspots across the country, best-ever international calling rates, unlimited subscription to Jio app and special solutions for enterprises. “Jio’s data, voice, video and full bouquet of Jio applications and content will be available for everyone, absolutely free, till December 31, 2016,” he said, promising to offer data speeds of up to 1 gigabyte per second.
Reacting to the Ambani’s Jio tariffs, Rajan Mathews, the Chairman of lobby group of incumbent operators COAI, said these low tariffs were aggressive but would not kill competition. “I don’t expect head to head adversarial pricing by incumbents (after Reliance Jio’s tariffs) but clever offers which will allow consumers to mix and match according to needs. Some features like simplicity in tariff structures will be good for the industry though service quality will remain the key area to watch out for,” Mathews told a business news channel.
Ambani further said the launch would transform India from a high-priced data market to having the lowest data rates anywhere in the world. Stressing that data must be affordable, he announced 10 plans, including the Rs 149 plan, where users will get free voice (local and STD), free roaming and 100 SMS along with 0.3 GB of 4G data. Under the Rs 4,999 plan, users will get 75GB of 4G data as well as unlimited 4G access at night for a period of 28 days. Other plans would be available for Rs 499, Rs 999, Rs 1,499, Rs 2,499, and Rs 3,999. All the plans, excluding the Rs 149 plan, will bundle in free unlimited SMSes. “The Jio app subscription worth Rs 15,000 will be complimentary to customers up to December 31, 2017,” Ambani added.
The company also announced 4G smartphones starting from Rs 2,999. Arch rival and the largest mobile operator in the country Bharti Airtel welcomed Reliance Jio’s entry to the digital world and said as a responsible operator it will fulfil all regulatory obligations as always. Existing operators under the aegis of Cellular Operators Association of India have been locked in a battle with Reliance Jio over providing points of interconnect.
“No doubt tariff plans for voice and data is going to be a game changer for telecom industry. Though, top-line from telecom business will start trickling in; however big concern arises on timelines of achieving operating break-even point in context of tariff policy deployed,” said Dharmesh Kant, Head, Retail Research, Motilal Oswal Securities.
Cartoon by- Nirjhar
