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Jio has made consolidation inevitable in Indian telecom, says report

Jio has made consolidation inevitable in Indian telecom, says report

Jio has made consolidation inevitable in Indian telecom, says report
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By CNBC-TV18 Apr 10, 2018 2:54:28 PM IST (Updated)

India became the highest mobile data user in the world within six months of Jio’s launch, consuming over 1 billion GB of data every month compared with 200 million GB earlier.

In a year and a half since its launch, Reliance Jio has changed the face of the Indian telecom, recasting the revenue model of an industry that was once powered by voice to one dominated by data, and making consolidation an inevitable requisite for survival, according to a new report.

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Earlier, voice contributed 75% of the revenue of mobile companies. The data consumption on the Jio network at 10 GB per month per user – a feat achieved in December 2017 – is the highest in the world and twice of that in China, said the said the report by Institute for Competitiveness.
India: Data Devourer
India became the highest mobile data user in the world within six months of Jio’s launch, consuming over 1 billion GB of data every month compared with  200 million GB earlier. Data usage in India has soared and the country is now only second to China in terms of the number of app downloads.
The price of data has also dropped sharply – average prices per GB of data have dropped to Rs 10 from Rs 152 – and internet is now within the reach of many people. Jio also enabled newer segments of society to use and experience internet for the first time, the report said.
 
Consolidation Way Forward
The entry of Jio has also intensified competition to such an extent that scale has become a crucial prerequisite and “consolidation the next eventual step in the industry’s evolutionary ladder”.
“The pace at which the company is gaining market share is sending out understandable jitters across the industry,” said the report.
Bharti Airtel has acquired the telecommunication services of Tata and Telenor while Vodafone is in its final stages of merger talks with Idea. After the merger, Airtel will lose its two-decade-long held position as the industry leader since the Vodafone-Idea combine will command a subscriber base of 400 million compared with Airtel’s 320 million, said the report.
Jio too has signed agreements to buy the assets of Reliance Communications.
The report said Jio’s entry would impact the Indian economy in three ways:
One, increased accessibility and affordability of data: Even the most conservative estimate shows that due to Jio’s entry, the annual financial savings to the consumers would be around $10 billion, said the report.
Two, digital services: Before Jio’s entry there were hardly any avenues where such high levels of data could be expended by a consumer. Now, Jio offers its consumers a wide bouquet of digital applications that address a variety of consumer needs such as education, health, entertainment and banking, among others.
Three, economy-wide impact on growth: An econometric analysis shows that Jio’s entry into the telecom industry will expand India’s per capita GDP by about 5.65%, if all else is kept constant in the economy, said the report.
RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.
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