What exactly did Jio do, to cause the telecom revolution and even manage to beat decade-old companies like Airtel and Vodafone? They took the unexpected route by betting on a new technology at a time when competitors were betting on existing technology…

1. India’s Telecom War: Blue Ocean Strategy in India’s telecom industry
In the past two years the Indian telecom industry has witnessed a marked disruption of the
entire ecosystem. Reliance Industries unveiled its new telecom initiative by launching LTE
enabled data services under the brand name Jio – to say that this has thrown the calculations of
its competitors off balance would be an understatement. The resulting price war has thrown the
spotlight once more on the once ignored customer.
What exactly did Jio do, to cause the telecom revolution and even manage to beat decade-old
companies like Airtel and Vodafone? They took the unexpected route by betting on a new
technology at a time when competitors were betting on existing technology…
Here is what competitors were saying about 4G LTE as late as 2016
"The relatively low proliferation of smart phones and LTE handsets in India and the nascent
stage of the ecosystem make us believe there is still huge headroom for 3G to grow even as a
select set of customers migrates to 4G," says a Vodafone India spokesperson.
“Himanshu Kapania, Managing Director, Idea Cellular, accepts that India's third-largest telecom
operator could not anticipate the 4G scenario. "We made an initial announcement that we will
do it [4G launch] in late 2016-early 2017, for the reason that we believed that both capital prices
of 4G equipment as well as handset prices were not right for a country of our income levels.” (1)
The rhetorical question is, of course, “What good is a newborn baby?”
Market Watch
Some years ago, the telecom industry was bursting at the seams with more than 10 big and
small operators. With balance sheets in the red for even established companies, it was
considered death for any new entrant to lock horns with Vodafone, Airtel, Idea and BSNL.

2. India had just made the shift from 2G services to 3G giving several Indians their first experience
of the internet.
Voice calling was the priority for everyone and data packs were left on the back burner. The
established operators paid a huge price for 3G spectrum, but deployed it in islands, the
customer experienced data availability as an ephemeral thing defined more by the lack of it.
The same island strategy was implemented when Airtel launched its 4G service in 2014, a time
when a minuscule part of the country held 4G-compatible devices. Vodafone was eyeing an
opportune moment but it acquired 4G license for just a few states.
Reliance was silently studying the market. It figured out that voice calling had no room for
growth since the incremental revenue was limited and the place for future competition was
identified as data, where none of the existing operators were giving quality service. In
September 2016, Jio launched its VoLTE enabled 4G services pan India with data availability on
all cell sites. The result was a uniform internet experience wherever you went. With an initial
offer of free voice calls, Jio instantly rose through the ranks while the others thought it to be a
gimmick.
Jio went on to create record after record. In 170 days, Jio achieved a record of snagging 100
million subscribers and currently boasts of 215 million making it the fastest company to hit the
200 million mark. Rival Bharti Airtel reached this target in 2014 and now stands at 309 million.
The threat of Jio scared Vodafone and Idea into a merger to combine their respective 222
million and 217 million subscriber base.
Even as late as beginning of 2018 Jio had 35.90% of the countries Data customers (See
Infographic below). Even though the lead in terms of no. of customer is large the lead in terms
of actual data provided by Jio is even higher at 70 – 80% of total data consumed in India.
This is because even today the mix of customers subscribing to internet services in the case of
operators such Airtel, Vodafone and IDEA is mostly 3G then 4G whereas all Jio customers are
on a faster 4G network.

3. Source: TRAI Report 2017
Pricing Strategy
Undoubtedly, the telecom war is also a pricing war. When Jio launched, it knew that Indians
were price conscious. Sim cards were free and so were voice calls. The only thing people had
to pay for was data which was also a measly Rs 50 per GB. Even when it raised prices a year
later, people did not feel the pinch.
It wasn’t long before people started opting for dual sim phones or carrying two phones - one for
their existing number and the other one exclusively for Jio’s data services. With its pan-India

4. launch, customers didn’t have to face the hassle of losing data service when travelling to other
cities.
Very soon, other operators caught on and slashed data and calling rates to stop the migration of
customers. But the war had already begun. When Jio launched in September 2016, Vodafone
had a 17.8% market share. By May 2018, Jio held 18.2% of the market from just 10% a year
earlier. Idea and Vodafone have been bleeding subscribers and once the merger is done, the
new entity will enter into a fresh price war. Airtel’s recent offer of Rs 149 for 2GB data a day was
countered by Jio increasing its daily limit to 1.5GB at the same cost. This tug of war in prices is
not expected to stop anytime soon. With just three major players competing in the market, the
telecom sector is witnessing the biggest ever fight for attention.
The Future
Jio has entrenched itself as the go-to data operator. While all other companies were busy on
voice calls, Jio took a big chunk out of data services. With its optical fibre network ready across
the country, the next phase will be to enter the wireline data services and provide it as a bundle
with mobile data packs. Additionally, by making data its forte, Jio has been able to provide
entertainment options alongside, such as JioTV and JioCinema.
Perceived as a fully telecom company, Jio has transformed itself into a data service provider
and the onslaught has pushed competing telecom companies to either fold up or buck up. Airtel,
Vodafone and Idea have all been compelled to sell off some or most of their mobile towers to
cut down debt. Airtel has a debt of Rs 95,000 crore and Vodafone-Idea together will hold Rs 1
lakh crore. Additionally as the war seems to be turning into an Airtel versus Jio fight, the former
is speaking to Warburg Pincus to loan it $1.5 billion.
It is unlikely that the tension will simmer down anytime soon. The market has shed many
players and the prediction is that in the long-term there will be just two companies vying for pole
position.

5. Source:
(1) https://www.businesstoday.in/magazine/cover-story/airtel-reliance-jio-vodafone-idea-in-the-
run-to-capture-indias-mobile-data-business/story/226494.html