Reliance Jio is giving a tough time to the well-established players in the Indian telecom sector. The Mukesh Ambani owned Reliance Jio swept behemoths like Idea Cellular, Bharti Airtel and Vodafone off their feet by offering freebies to the customers.
The 3rd quarter of the fiscal 2016-17 saw Jio’s rivals reeling in the red or reporting considerably dip in their profitability. The current market scenario suggests that the 4th quarter will be no different.
The question is whether Jio’s strategy is sustainable in the long run. Most experts aver thatJio will not continue this predatory pricing policy forever; otherwise it will lead to price wars amongst the operators.
“Margin pressure on telcos will continue as long the free data offer from Reliance Jio continues. As and when Reliance Jio decides to withdraw its offer and start charging for its data services, then it will be a different matter,” said Arpita Pal Agrawal, partner and leader, Telecom Industry Practice, PricewaterhouseCoopers India.
Reliance Jio is offering free data to its customers till march 2017. If the company decides not to extend this offer, it wil be a different ball game. The competition will then be fought on the plank of differentiation. Customers would opt for a particular service provider on the basis of speed, customer service and of course tariff bundles.
As of now, Reliance Jio has been able to make inroads in the India market by wooing the price sensitive Indian consumers.