Jio Business Strategy

Jio Business Strategy

India is home to the world’s second largest mobile user base and the third highest number of internet users. Understandably, the telecom sector in the country is hyper-competitive, with multiple groups to capture the largest piece of the pie. Reliance Jio Infocomm Limited (or Jio for short) is the newest player to enter the competition, and it’s not just winning the game but rewriting the rules altogether.

Fearful of the uncontested domination such an offer would afford Jio (around 70 percent of the industry’s revenues come from voice), India’s biggest mobile network operators appealed its illegitimacy to the Telecom Regulatory Authority of India (TRAI). But TRAI found Jio’s offer to be legal and instead levied massive fines on Bharti Airtel, Vodafone, and Idea Cellular for trying to undermine the Reliance Industries Limited (RIL) subsidiary by not providing sufficient points of interconnect to its SIM card users.

One question that seems to be on everyone’s mind though, is how Jio will make a profit when their rates are so low as to defy belief. To answer this question, one needs to understand Mukesh Ambani’s grand ambitions, not for the present, but the future.

Immediate revenue is no concern to Mukesh Ambani. The Reliance Jio is a big bet on the future, and the company’s present aim is to establish the ideal eco-system for when that future arrives.

Despite having a massive user base, internet penetration and speed in India is low when compared to other countries. Only about 24.3 percent of the Indian population accessed the internet through mobile phones in 2016. But the figure is expected to rise to 37.4 percent in 2021 as the Indian population, particularly in rural areas, becomes progressively ‘digital’.

As an increasing number of people will require mobile and internet connectivity in the coming decade, Reliance Jio will be in the prime position to capture the massive untapped market.

Jio’s ambitions aren’t limited exclusively to mobile internet. The company plans to rake in profits from its LYF brand smartphones, broadband internet offerings, and Jio mobile applications — the entire suite, which includes apps like Jio Music, Jio TV, Jio Cinema, and a digital wallet, will be charged as a Rs 15,000-per-year subscription. Reliance also plans to consolidate its ‘Digital India’ missive with the setting up of Jionet Wi-Fi hotspots in multiple cities — Mumbai, Kolkata, Surat, Ahmedabad, Indore, Mussoorie, and Lucknow are among the cities which currently feature these hotspots in select locations.


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