Reliance communications dissertation

RELIANCE COMMUNICATION’S STRATEGY AND ITS

IMPACT ON THE INDIAN MOBILE

TELECOMMUNICATIONS INDUSTRY

Student Name: Ankit Yadav – 297986

Course: BA (Hons) Business Administration Top –Up

Northbrook College Sussex – West Durrington Campus

Year of Submission: 2009 - 2010

Dissertation Supervisor: David Broughton

Acknowledgements

The witting of this dissertation has been one of the most significant academic

challenges I have ever had to face. Without the support, patience and guidance of the

following people, this study would not have been completed. It is to them that I owe my

deepest gratitude.

• Lecturer David Broughton who undertook to act as my supervisor despite his

many other academic and professional commitments. His wisdom, knowledge

and commitment to the highest standards inspired and motivated me.

• My parents, who have always supported, encouraged and believed in me, in all

of my endeavours.

Reliance Communications Page 2 of 71 Ankit Yadav - 297986

Declaration

I, the undersigned, hereby declare that this dissertation entitled, “Reliance

communications strategy and its impact on the Indian mobile telecommunications

industry” is my own work, and that all the sources I have used or quoted have been

indicated or acknowledged by means of completed references.

Ankit Yadav Date of Submission

Word Count: 12,024 (Twelve Thousand and Twenty Four).


Abstract

Recognising the crucial role that can be played by the telecommunications sector in

India’s development, the Government of India in 1999 initiated a number of changes in

the telecommunication and regulatory and policy framework. Through these the

Government of India hoped to facilitate an increase in telecommunication penetration,

which stood at 1.3 percent in 1995. The reforms, with an eye on a telecommunication

penetration of fifteen percent by 2010, resulted in a flurry of private operators entering

the market breaking the monopoly of the incumbent operator Bharat Sanchar Nigam

Limited (BSNL). Reliance Communications was born in the year 2000 as a child of the

market liberalisation process with a vision to provide the latest telecommunication

facilities to every Indian at the price of a post card. Reliance Communications helped

the mobile phone penetration in India to grow from 0.25 percent in early 2001 to 40.31

percent in January 20101.

The first part of this dissertation will introduce the scale and complexity involved in

shaping the Reliance Communications vision in reality. The second part will examine

the cost strategies adopted by the Reliance Communication, while the third part

examines the creative ways in which the process of marketing value added to the

process.

1
TRAI (2010). The Indian Telecom Services Performance Indicators.


Table of Contents

ACKNOWLEDGEMENTS .......................................................................................................................................... 2

DECLARATION ........................................................................................................................................................ 3

ABSTRACT .............................................................................................................................................................. 4

LIST OF ABBREVIATIONS ........................................................................................................................................ 7

HYPOTHESES .......................................................................................................................................................... 9

AIMS AND OBJECTIVES .......................................................................................................................................... 9

1.0 INTRODUCTION .............................................................................................................................................. 10

2.0 LITERATURE REVIEW ...................................................................................................................................... 12

2.1 THE VISION, SCALE AND COMPLEXITY .............................................................................................................12

2.2 PRICING STRATEGY ..........................................................................................................................................15

2.2.1 Dhirubhai Ambani Pioneer Offer – Democratising Mobiles..............................................................17

2.2.2 Monsoon Hungama Scheme – Showers of Mobiles .........................................................................19

2.2.3 Pre-paid Offering – Market Consolidation ..........................................................................................20

2.2.4 Cost Management – The Inside Picture .............................................................................................22

2.3 SALES AND MARKETING STRATEGY .................................................................................................................27

2.3.1 Customer Generation – Tapping in to Internal Resources ...............................................................27

2.3.2 Dhirubhai Ambani Entrepreneurship Programme – A New Way to Market ...................................28

2.3.3 Advertising – Educating Masses and Evoking Passions ..................................................................30

2.3.4 RWorld – Reliance Way of Putting the World in Your Hands ..........................................................32

2.3.5 Product Innovations – Connecting with Every Section of Society .................................................. 33

2.3.6 Customer Service – Icing on the Marketing Cake .............................................................................35


2.4 TACKLING THE PROBLEM PHASE .....................................................................................................................35

3.0 METHODOLOGY ............................................................................................................................................. 40

3.1 RESEARCH METHODS.......................................................................................................................................40

3.2 DATA COLLECTION TECHNIQUES .....................................................................................................................41

3.3 LIMITATIONS TO THE RESEARCH .......................................................................................................................42

4.0 RESULTS AND FINDINGS ................................................................................................................................. 44

5.0 CONCLUSIONS ................................................................................................................................................ 50

6.0 RECOMMENDATIONS ..................................................................................................................................... 52

REFERENCES......................................................................................................................................................... 54

APPENDICES......................................................................................................................................................... 58

APPENDIX – 1 – QUESTIONNAIRE RESULTS: ..........................................................................................................58

APPENDIX – 2 –FIFTH LARGEST TELECOM OPERATOR IN THE WORLD:..................................................................65

APPENDIX – 3 –TARGETS THE LARGEST UNTAPPED POPULATION IN THE WORLD: ................................................65

APPENDIX – 4 – QUESTIONNAIRES .........................................................................................................................66

Appendix – 4.1 Reliance Mobile User Category Questionnaire: ...............................................................66

Appendix – 4.2 – Non-Reliance Mobile User Category Questionnaire: ...................................................68

APPENDIX – 5: SUBSCRIBER NUMBERS (MILLIONS) BY SERVICE PROVIDER ..........................................................70

APPENDIX – 6: STRATEGY COMPETITIVE ADVANTAGE ..........................................................................................71


List of Abbreviations

BSNL – Bharat Sanchar Nigam Limited

BTS – Base Transceiver Station

CDMA – Code Division Multiple Access

COAI – Cellular Operators Association of India

CPP – Calling Party Pays

DOT – Department of Telecommunications India

GIS – Global Information Systems

GSM – Global Subscriber Mobile

IDC – Internet Data Centre

IPLC – International Private Leased Circuit

ISV – Independent Software Vendors

NCDEX – National Commodity Derivatives and Exchange Limited

POS – Point of Sale

RIM – Reliance India Mobile

SMS – Short Messaging Service


TRAI – Telecommunication Regulatory Authority of India

VPN – Virtual Private Network

WLL – Wireless in Local Loop


Hypotheses

The strategic route taken by Reliance communication is the right way forward for the

Indian telecommunications industry.

Aims and Objectives

The main aim of this dissertation is to look critically if the unlimited and in house

resources available to Reliance Communication are the factors for the huge success or

Reliance Communications; and also if in any way Reliance Communications have used

its power as a business conglomerate against its competitors unlawfully.

Core objectives of this dissertation are to:

investigate Reliance Communications role in the transformation of the Indian

telecommunications industry;

investigate what were the challenges and complexities which Reliance

Communication faced during the transformation process;

investigate how Reliance Communication tackled the problem phase;

investigate who are Reliance Communications main competitors and what

strategies and processes are used by its competitors to gain the market share;

and

investigate how Reliance Communications could have used different strategies.


1.0 Introduction

In 1999 the Government of India recognised how the telecommunication sector could

play a crucial role in India’s development and then initiated number of changes in the

mobile telecommunication regulatory and policy framework. By initiating these changes

the Indian Government hoped to facilitate an increase in telecommunication penetration;

this resulted in a flurry of private operators entering the market breaking the monopoly

of the incumbent state owned operator Bharat Sanchar Nigam Limited (BSNL).

The foundation of Reliance communications (RCOM)2 was laid in 1999, with a vision to

“provide the latest telecommunications facilities to every Indian at a price of a post

card”. With over 86 million subscribers across India, Reliance communications is India’s

second largest mobile service brand. Reliance Communications now cover over 2,400

towns, 600,000 villages, and still counting. Reliance Communication has achieved many

milestones in this short journey. In 2003, AC Nielsen voted Reliance Communications

as India’s most trusted brand. In July 2003, Reliance Communications created a world

record by adding one million subscribers in a matter of just ten days through its

‘Monsoon Hungama’ offer3.

What sets Reliance Communications apart from its competitors is the fact that nearly

ninety percent of their handsets are data-enabled, and can access hundreds of Java

2
Bombay Stock Exchange – Script – RCOM.

3
Reliance Communications. (2010). Overview – Businesses – Mobile.


applications on Reliance Communications Mobile world. Reliance Communication has

ushered in a mobile revolution by offering advanced multimedia handsets to the

‘common man’ of India at very reasonable prices. This innovative low pricing has

increased the number of mobile phone users and its result is clearly reflected in the

meteoric rise in India’s tele-density over the past eight years. Reliance Communications

pan-India wireless network runs on CDMA2000 1 x technology, which has superior

voice and data capabilities compared to other cellular mobile technologies. CDMA2000

1 x is more cost effective as it utilises the scare radio spectrum more efficiently than

other technologies do. Enhanced voice clarity, superior data speed of up to 144 kbps

and seamless migration of newer generations of mobile technologies are some of

Reliance Communications differentiators4.

The main purpose of this dissertation is to study and discuss the main strategies

adopted by Reliance Communication to usher in the telecommunication revolution in

India. Specifically this dissertation will examine the new paradigms in cost competence

and marketing which helped Reliance Communication to drive down costs and drive up

volumes.

4
Reliance Communications. (2010). Overview – Businesses – Mobile.


2.0 Literature Review

During the search for literature following search engines have been used: Google.co.in,

in.yahoo.com and Rediff.com have been used and in addition these Google Scholar,

Gale Power Search, market line and Emerald Insight were used as well. Initial searches

focused around ‘Reliance communication’s strategies’, ‘Reliance communication’s

profile’ and ‘Reliance communication’s competitors’.

2.1 The Vision, Scale and Complexity

To succeed in the long term, businesses need a vision of how they will change and

improve in the future. The vision of the business gives it energy. It helps in motivating

employees. It helps set the direction of corporate and marketing strategy5. Following are

the six requirements for success:

- provide future direction;

- expresses a consumer benefit;

- is realistic;

- is motivating;

- must be fully communicated;

- consistently followed and measured.

5
N/A (2010). “Strategic planning – values and vision.”


Reliance Communications vision states:

“We will leverage our strengths to execute complex global-scale projects to facilitate

leading-edge information and communication services affordable to all individual

consumers and businesses in India.

We will offer unparalleled value to create customer delight and enhance business

productivity. We will also generate value for our capabilities beyond Indian borders and

enable millions of India's knowledge workers to deliver their services globally.”6

The founder of Reliance Group of Companies – late Dhirubhai Ambani dreamt of digital

India – an India where the common man would have access to affordable means of

information and communication. Dhirubhai, who single-handedly built India’s largest

private sector company virtually from scratch, had stated as early as 1999: “Make the

tools of information and communications available to people at an affordable cost. They

will overcome the handicaps of illiteracy and lack of mobility.”7

Reliance Communications was launched as a very ambitious project. The project was

conceived at the convergence of communication and information technology. It was

designed to connect every home and office in India with each other and the world

through an overarching terabit optic fibre digital distribution system. It was developed to

provide a range of services to every citizen, company and community. It was envisaged

6
N/A. (2010). “Overview - Vision.”

7
N/A. (2010). “About Sh. Dhirubhai Ambani”.


to earn leadership for India in the knowledge age. Reliance Communications aimed to

create new paradigms in enterprise, entrepreneurship and engagement8.

To achieve all of these objectives Reliance Communications rolled out a complex

architecture of domains, functions, facilities, coverage and services, through the latest

technology aiming to add value through messaging, facilitating business transactions,

videoconferencing, music and movie download services. According to a comparison

cited by Mukesh Ambani, former Chairman of Reliance Communications, the United

States has only about 100 out of 700 cities with the CDMA2000 1 X technology that

provides the benefit of mobile voice, data and video, while Reliance Communications in

2008 stated providing these services to 100% of Indian cities.

According to Anil Ambani, current Chairman of Reliance Communications, company has

built the largest infrastructure in the information and technology sector by any new

entrant. To begin with, Reliance Communications has networked 673 towns and cities.

Currently it has presence in 1,850 towns and cities and 75,000 villages touching about

550 million Indians. At the end of 2008, the company successfully connected all

640,000 villages and 5,161 odd towns and cities to each other and to the world in a

seamless way. This gigantic effort involving more than 8,500 BTS (Base Transceiver

Stations) towers covering about ninety one percent of the country’s national highways

8
N/A. (2010). “About Sh. Dhirubhai Ambani”.


and 85% of the rail routes is compared by the company officials to the scale of effort

involved in building virtually the entire railway system in India9.

2.2 Pricing Strategy

“My vision is to provide the latest telecommunication facilities to every Indian at the

price of a post card” – Late Dhirubhai Ambani, founder Reliance group. “A monthly

spend of Rs 25010 (GBP £ 3.67) would usher in a telecom revolution in India. At that

rate, the telecom market will be around 600 million lines,” said by B D Khurana, group

president, Reliance Communications11.

Reliance Communications challenged old cost structures in the telecommunications

industry. Historically, telecommunications services have been the privilege of a small

section of society. Reliance Communications broke this mould with a tariff that can be

described as the most ambitious ever listed by a telecom company in India12. It aimed

for prices as low as the cheapest alternative – the post card. While other companies

aimed for higher value market, Reliance Communications realised that there is a market

in driving volumes aimed at creating a completely new market. “According to estimates

there are around 320 million [people in] households with an annual income of Rs 2.5
9
N/A. (1999 – 2009). “Milestones”.

10
1 GBP £ = Rs.68.00 INR.

11
Jagannathan, V. (2003). “Affordability is what hinders telecom revolution, finds seminar”.

12
Ganpati, P. (2002). “Reliance set to revolutionise mobile services”.


lakh (GBP £ 3,676) [and above]. Of that, half are in rural areas with similar purchasing

power. And this segment was expected grow to 478 million by 2007 and 602 million by

2010” commented by B D Khurana, group president, Reliance Communications, hinting

about the market that Reliance Communications aimed to capture13.

Following on from his work analysing the competitive forces in an industry, Michael

Porter suggested four “generic” business strategies that could be adopted in order to

gain competitive advantage14. The four strategies are summarised in (appendix six)

In case of Reliance Communications cost leadership strategy has been implemented as

in this strategy, the objective is to become the lowest-cost producer in the industry.

Many (perhaps all) market segments in the industry are supplied with the emphasis

placed minimising costs. If the achieved selling price can at least equal (or near) the

average for the market, then the lowest-cost producer will (in theory) enjoys the best

profits. As this strategy is usually associated with the large scale businesses offering

“standard” products with relatively little differentiation that are perfectly acceptable to the

majority of customers15.

This strategy has worked very well for the Reliance Communications to gain the market

share very quickly and gain a strong foothold in the Indian telecommunications market

13
Jagannathan, V. (2003). “Affordability is what hinders telecom revolution, finds seminar”.

14
N/A. (2010). “Strategy – Competitive Advantage.”

15
N/A. (2010). “Strategy – Competitive Advantage.”


in a short span of time. Occasionally Reliance Communications also discounts its

products to maximise sales, as it has a significant cost advantage over the competition

and, in doing so, Reliance Communications can further increase its market share.

2.2.1 Dhirubhai Ambani Pioneer Offer – Democratising Mobiles

Announcing its launch of mobile services in December 2002 Reliance Communications

offered an introductory scheme called the ‘Dhirubhai Ambani Pioneer’ offer. Under this

scheme consumers were given a free digital mobile phone, unlimited free incoming

phone calls, billing at fifteen-seconds pulse rate, for a one-time fee of Rs 3,000 (GBP £

44) as a membership charge and Rs 600 (GBP £ 9) per month (paid in advance) as

telephony charges. All incoming calls were offered free and outgoing calls were charged

at 10 paisa (0.2 GBP £ pence) for fifteen seconds. The cost of a national long-distance

call to any Reliance phone in India was forty paisa (0.8 GBP £ pence) for a minute16. In

addition, the monthly charge included 400 minutes of outgoing calls. Only calls over and

above this were charged extra. Value added services like voice mail, call waiting, call

hold, call divert, call identification, call conferencing, dynamic locking and text

messaging were offered free. Internet access through the phones was also offered free

initially17.

16
N/A. (2002). “Reliance Infocomm heralds a new way of digital life for India”.

17
Ganpati, P. (2002). “Reliance set to revolutionise mobile services”.


“The pricing system is in line with Dhirubhai Ambani’s dream and directive of making

phone calls affordable for every Indian. It has been made possible due to the significant

capital productivity achieved,” – said by Mukesh Ambani, former Chairman, Reliance

Communications18.

The Dhiubhai Ambani offer unlocked the demand for telecommunication services in

India by challenging many accepted practices. The biggest entry barrier till that point

was the handset prices. The mobile handsets in the Indian market were priced at Rs.

7,500 (GBP £ 110) upwards, which made them unaffordable for most Indians. Handsets

were to be purchased separately since the operators until then offered only services,

and never dealt with handsets. For a customer this meant to deal with two suppliers –

one for services and another for handset. Reliance Communications, for the first time in

India, offered handsets free of charge, along with the service19.

Reliance Communications managed this free handset offer in three ways. Firstly,

Dhirubhai Ambani offer had a built-in contract of three years for every customer. This

guaranteed cash flows and minimised churn allowing them to discount the cost of the

phone. Secondly, Reliance Communications entered into exclusive agreements with

handset vendors like LG and Samsung. For a guaranteed purchase of hugs volumes

(between one million and eight million phones) the prices were negotiated down to rock

18

19
N/A. (2002). “Reliance Infocomm ushers a digital revolution in India”.


bottom. Thirdly, brand, thus ensuring mass production and further reduction in prices.

Internal estimates say that the handset model which was available on the open market

at a price of Rs. 10,500 (GBP £ 155) was procured at a price of Rs. 800 (GBP £ 11.75)

by Reliance Communications.

2.2.2 Monsoon Hungama Scheme – Showers of Mobiles

In an attempt to further democratise telecommunications services, Reliance

Communications followed up the Dhirubhai Ambani Pioneer offer with the Monsoon

Hungama Scheme on the 1st of July 2003. This unprecedented scheme allowed

customers to get a mobile phone for an upfront payment of just Rs. 501 (GBP £ 7.50),

bringing down the entry barrier to a bare minimum. This scheme also permitted a low

monthly spend, allowing the customers to restrict the fixed monthly outgoing (post-paid)

to Rs. 449 (GBP £ 6.60), inclusive of the Rs. 200 (GBP £ 2.95) paid as club

membership and privilege charges20.

Reliance Communications Monsoon Hungama offer of a phone for Rs. 501 (GBP £ 7,

50) was a runaway success. Monsoon Hungama Scheme pushed Reliance

Communications to the top of the telecom market in terms of the subscribers. It was the

biggest promotional success in the history of mobile telephony in India. One million

subscribers joined Reliance Communications in just ten days after the launch of the

Monsoon Hungama Scheme. The ripples of the offer were not limited to Reliance

20
N/A. (2003). “Reliance Infocomm makes mobile telephony more affordable”.


Communications. This offer led GSM handset prices to fall as low as Rs. 1,500 (GBP £

22). In the footsteps of Reliance Communications, during the same period, many

competitors started offering flexible pre-paid options at less than Rs. 500 (GBP £ 7.35)

per month for their GSM mobile services21.

2.2.3 Pre-paid Offering – Market Consolidation

As the market of post-paid mobile services started stabilising, Reliance

Communications launched its first pre-paid offer. The pre-paid offer marked a

fundamental shift in Reliance Communications strategy where it had built a post-paid

customer base of over six million through the pioneer and Hungama schemes. At a time

when Reliance Communications was finding it hard to manage its post-paid customers,

the new strategy offered two advantages. First, there was the obvious advantage that

cash is collected beforehand. Second, the cost of collecting bills – which is one to three

percent of revenue – vanished22.

In February 2004, Reliance Communications announced another set of pre-paid

schemes, quite different from the earlier schemes. The schemes gave customers free

recharge vouchers worth nearly the cost of a Reliance India Mobile (RIM) pre-paid

handset that they buy. In simple terms it meant that customers were getting the phone

free rather than having to buy it as they would if they opted for a GSM pre-paid scheme.

21
Gupta. D, S. (2004). “Reliance makes a cash call”.

22
Gupta. D, S. (2004). “Reliance makes a cash call”.


Also, the customers were allowed to remain connected for a full year without having to

buy new recharge vouchers. Under the pre-paid launch scheme, a customer had to pay

Rs. 3,500 (GBP £ 51.50) for a Motorola C131 handset and received free Reliance

Communications pre-paid connection and recharge vouchers worth Rs. 3,240 (GBP £

47) valid for six months and with additional grace period of six months. In this scheme,

all local calls, intra-circle calls and inter-circle calls of less than 50 km to another mobile

phone had a flat rate of Rs. 2.49 (GBP £ 0.036) per minute. All inter-circle calls of above

50 km to another mobile phone had a flat rate of Rs. 2.99 (GBP £ 0.043) per minute. All

local calls, intra-circle calls and inter-circle calls of less than 200 km to a fixed phone

had a flat rate of Rs. 2.99 (GBP £ 0.043) per minute and all inter-circle calls of above

200 km had a flat rate of Rs. 3.99 (GBP £ 0.058) per minute. International calls were

billed at Rs. 16.99 (GBP £ 0.25) per minute23.

Other features of Reliance Communications pre-paid connection included automatic

roaming in the pan-India Reliance Communications network at no extra charge, a

nationwide recharge facility with any available denomination (stating from Rs. 165 or

GBP £ 2.45), a national long distance and international long distance facility, and call

forwarding and voice messaging services at local mobile call rates from anywhere in the

Reliance Communications network. This scheme was different from the earlier schemes

in two ways. Firstly, though the handset came virtually free of charge, the entry barrier

was definitely higher since the customer committed to a higher volume of calls.

23
Ashiwal, S. (2004). “Reliance Infocomm unveils plans for prepaid service”.


Secondly, the customers who were hoping that Reliance Communications would bring

prices substantially down, as in the past, were disappointed. Airtime tariffs (the price of

calls per minute) of this scheme (discussed above) were almost the same as those

offered by the GSM operators24.

It is interesting to note the subscriber figures (in millions) provided by the Telecom

Regulatory Authority of India during the same time period please refer to appendix five.

2.2.4 Cost Management – The Inside Picture

The Reliance Communications pricing system was always in the line with Dhirubhai

Ambani’s dream and directive of making phone calls affordable for every Indian, and

has been possible due to the meticulous planning, ‘out of the box’ thinking in touch with

reality, and significant capital productivity achieved on the strength of Reliance

Communications track record in project management25.

Reliance Industries, the parent company of Reliance Communications, is the largest

private sector corporation in India with stakes in Petroleum, Petrochemicals,

Engineering, and Finance. This scale of operations provided great leverage as the

company ventured into telecommunications. Reliance Communications, in the initial

stages, shared all Reliance Industries resources to ensure cost effectiveness in every

service that it provided. Reliance Communications operated out of existing Reliance

24
N/A. (2004). “Reliance Infocomm storms prepaid market, announces path breaking schemes”.

25


Industries offices and utilised the capital and personnel resources to the extent possible.

Reliance Engineering Associates Ltd, as associate company, made sure that the

engineering and manpower costs were maintained at bare minimum. According to B D

Khurana, the Group President of Reliance Communications “... in developed countries

human resource costs account for twenty two percent of a telecommunication

company’s operating costs as against five percent in India...But we utilise all of our

internal resources in large numbers which further reduces the cost”. In addition Reliance

Communications centralised most of its operations. Citing Reliance Communications

strategy, B D Khurana said: “80 percent of our administration and operation is

centralised. Compared to the best telecom networks in the world we have deployed only

half the number of people per 1,000 lines making our human resources the highest

productive resource.” Reliance Communications also exploited the extensive distribution

channels which were set up by its parent company, Reliance Industries for promoting

and distributing its mobile services.

A group company, Reliance Telecom Ltd, which uses the GSM technology to provide

services to seven telecom circles across eleven North Eastern states of India, helped

Reliance Communications in learning and managing cost structures during the initial

stages. Reliance Telecom and Reliance Communications synergy helped in the

optimum utilisation of their networks in two ways. Firstly, Reliance Communications

network started routing all the calls originating from Reliance Telecom, which

guaranteed traffic and revenues from day one and, secondly, the network of Reliance


Telecom helped Reliance Communications in gaining a foothold in the North Eastern

market, where it did not possess telecommunications licences.

Provision of multiple services is another strategy which Reliance Communications used

to manage costs. When most of the other mobile operators focused exclusively on the

provision of mobile services, Reliance Communications, in a phased manner, started

offering all the services which could utilise their network and other resources optimally.

Apart from the basic mobile services, Reliance Communications currently offers

landline, broadband Internet, leased line, VPN (Virtual Private Network), IPLC

(International Private Leased Circuit), Centrex and IDC (Internet Data Centre) services,

thus achieving lower costs per service and more revenues.

Another factor that worked in the favour of Reliance Communications was the state of

the world economy. During the period of Reliance Communications start up, in years

2000 to 2002, the world economy experienced a time of turmoil. There was a deepening

and reinforcing of the global economic slowdown that had begun to set in from the end

of year 2000. According to the IMF estimates, world output recorded a mere 2.4 percent

growth during year 2001, compared to 4.7 percent during year 2000. The growth in

world trade volume also declined sharply to about one percent during year 2001, as

against 12.4 percent in year 2000. The global slowdown was accentuated further by the

terrorist attacks in the United States on September 11, 2001. These ripples were

reflected in the telecommunication industry26.
26
N/A. (2001 – 2002). “Economic Survey – International Economic Enviroment”.


After a steady growth throughout the 1990s, the United States telecom industry saw a

decline for the first time in ten years in 2001. US imports of telecom equipment recorded

a decline of nine percent, and a decline of seven percent in year 2001 as against year

2000. But in the case of Reliance Communications these negative events had a positive

impact. The world economic and telecommunication meltdown helped Reliance

Communications to negotiate better prices for equipment. Since Reliance

Communications placed huge orders they were in an advantageous position to

command lower prices from nearly all vendors who were trying to push out equipment

from their warehouses. According to internal rumours, Reliance Communications

procured discounts of up to 90 percent on the market prices from vendors like Lucent

and Nortel.

Since the global meltdown ensured rock bottom property prices across India, Reliance

Communications was able to own, lease and rent property required for the offices,

showrooms and equipment installation at minimum cost. Added to this careful planning

ensured that the structures including the telecommunication towers were made and

erected for a minimum cost. The fibre optic cables were procured from Reliance

Industries own factories resulting in further cost reduction. According to the former

Chairman, Mukesh Ambani, Reliance Communications “...capital costs per subscriber

were about 50 to 70 percent lower than those of all new global telecommunications

deployments in recent times”.


Reliance Communications also exploited loopholes in the Indian telecommunications

policy to cut costs. This problematic episode is discussed further in section 2.4. The

GSM licenses were offered for the four metropolitan cities and eighteen circles after a

tendering and bidding process. These licenses were procured by various mobile

operators from the period year 1995-97 for a license fee as hefty as GBP £ 4 billion.

The new telecom policy in year 1999 reduced this license fee significantly, incorporating

a revenue sharing arrangement. In January 2001, a policy was announced for additional

licenses in Basic and Mobile services. The entry fee for the basic services was fixed at

GBP £ 0.1 million to GBP £ 14.5 million, while for the fourth mobile operator (since in

most circles there were three operators already) it was fixed at GBP £ 0.1 million to

GBP £ 22.5 million, depending on the area of service provision. According to this policy,

WLL service was considered a by-product of basic service and could be provided by a

basic telecom operator at no extra license fee. As Reliance Communications studied the

balance sheets of the existing mobile operators they found that the actual revenue

realisations were far short of projections, leading to mobile operators being unable to

arrange finance for their projects and complete rollouts. This created a vicious circle of

high subscription charges and low penetration for mobile operators. Reliance

Communications ensured this cost would be minimised. All these measures ensured

that the capital and operating expenditures of Reliance Communications were

minimised as compared to its competitors, helping it offer services at cheaper prices.


2.3 Sales and Marketing Strategy

Reliance Communications radically refined marketing models in India and engaged

homes and enterprises directly by having the ability to deliver physical and virtual

products and services as part of one system. Reliance Communications through its

aggressive, unconventional tactics changed the rules of the mobile marketing game in

India.

2.3.1 Customer Generation – Tapping in to Internal Resources

Reliance Communications targeted internally as it looked for the first set of its

customers. Officials of Reliance Communications realised that an employee base of

more than 50,000 and a shareholder base of about 3.3 million was the best place to

start as far as customers were concerned. Every employee was offered ten connections

at a discounted rate. While the normal monthly charges would be Rs. 600 (GBP £ 8.85),

for the employees they were offered at Rs. 500 (GBP £ 7.35). Many employees bought

connections for their relatives and friends. During the annual general meeting the

Reliance Communications, former, Chairman Mukesh Ambani offered shareholders a

discount package. The company offered a Rs. 850 (GBP £ 12.5) discount on initial

payments on subscription per connection. In addition, the shareholders were offered

free usage worth Rs. 100 (GBP £ 1.50) for six months. This amounted to a total

discount of Rs. 1,450 (GBP £ 21.50) per connection. In addition the shareholders were

encouraged to promote Reliance Communications connections in their circles of

influence. If a shareholder subscribed to two connections, he or she would get free


usage worth of Rs. 100 (GBP £ 1.50) per connection for twelve months, in addition to

the Rs. 850 (GBP £ 12.5) per connection discount. This amounted to a total discount of

Rs. 4,100 (GBP £ 60) for two connections27.

2.3.2 Dhirubhai Ambani Entrepreneurship Programme – A New Way to

Market

In the case of marketing channels, instead of resorting to the tried and tested means,

Reliance Communications created a completely new model. As a tribute to Dhirubhai

Ambani, the acknowledged icon of a new entrepreneurial wave in India, Reliance

Communications fostered a new breed of entrepreneurs, as channel partners. The

Dhirubhai Ambani Entrepreneur Programme began with an aim of enrolling 200,000

individuals who are committed to acquire new customers and creating a new experience

for them, based on flawless service and feeling of satisfaction28. About 50,000

individuals were recruited in the matter of weeks who were guided and supported by

900 Reliance Communications executives across India. In 673 towns and cities,

Reliance Communications trained these entrepreneurs in basic skill sets, so that they

are able to deliver value to customers at their doorsteps. Reliance Communications

envisaged spending over Rs. 1,000 million (GBP £ 18.5 million) per year in training and

competency building programmes for these entrepreneurs. Through this programme, in

27
N/A. (2003). “Reliance package for shareholders – offers discounts on mobile phone connections”.

28


addition to contributing to society by encouraging other enterprises and creating

economic opportunities for millions of young Indian, Reliance Communications also

leveraged goodwill and networks29.

To complement the entrepreneurship Programme, Reliance Communications started

retails outlets in prime commercial and residential areas. In retail spaces ranging from

800 and 2,000 sq ft, in major Indian cities, district headquarters and towns that would

number over 500, the company leased or purchased areas and set up Web-Worlds. At

the Web-Worlds the customer could interact directly with the company officials, see,

touch and try the products and then buy. At the phone stores, the customers could buy

the phones directly across the counter. The company envisaged that ultimately there

would be at least one Web-World in all the towns where Reliance Communications has

a presence30.

The vision of Dhirubhai Ambani – mobile phone in every Indian’s hand – drove Reliance

Communications further to reach out to places hitherto untapped by any telecom

company in India. Reliance Communications aggressively promoted its limited mobility

telecom service by participating in or having partnerships at various shopping malls,

book fairs, community functions, kiosks, letting people have a mobile phone connection.

To build the customer base Reliance Communications went where the customers were

29
N/A. (2002). “About Reliance Developer Program”.

30
N/A. (2003). “Milestones”.


going – to grocery stores, gas stations, music stores, departmental stores, street side

vendors, bookshops and even hotels and restaurants. To ensure that the product was

available at the customer’s doorstep, Reliance stocked its handsets in about 15,000

outlets across India, while 70,000 outlets in India sold the recharge coupons. Reliance

Communications also appointed 600 exclusive distributors who sold only the pre-paid

offering. Retailers in India like FabMall, PlanetM, HP, Music World and Timex started to

bundle their products along with Reliance India Mobile. Additionally the company

conducted nationwide product demonstrations and announced that the Pioneer offer

would be a limited period offer, which further enhanced the interest of the consumers.

2.3.3 Advertising – Educating Masses and Evoking Passions

Advertising was a marketing strategy which complemented the unconventional use of

channels by Reliance Communications. The Reliance mobile brand was branded as

India Mobile to cash in on patriotic feelings. Bundling of handsets along with the service

– a first time in India – allowed Reliance Communications to resort to a co-branding

exercise with the handset makers. The Reliance Communications brand name was

embossed on every handset which gave it a unique cachet, while the costs of many

advertisements were discounted since they were also borne by the handset makers. A

mega advertisement campaign was launched across the media to mark the launch. The

blitzkrieg coincided with the world cup tournament, ensuring a huge audience. The main

theme of the first campaign was built on the vision of Reliance Communications in

bringing the power of telecommunications to every person in India. This campaign


helped to educate people on the importance of the telecommunication services. The

next set of campaigns talked about the innovative product features which differentiated

Reliance Communications from its competitors. The advertisements announced that

Reliance India Mobile was ‘Kabhi mobile, kabhi computer’ (Sometimes Mobile,

Sometimes Computer). In the subsequent campaigns Reliance Communications started

riding on movies and cricket as themes.

Overall three observations emerge from the way Reliance Communications handled the

media. Firstly, Reliance Communications built a huge public relations exercise around

the launch of the product. The public relations efforts gave much leverage to the

advertising and gave rise to a word of mouth campaign. Secondly, Reliance

Communications utilised every single media channel very effectively. Reliance

Communications advertised on every TV channel available and in most newspapers,

thus making sure that the product was being promoted across India – a nation very

much divided by language and market conditions. At the peak Reliance

Communications booked around 5,000 spots on 40 TV channels, one million sq ft of

space on hoardings across India and inserted ads in over 70 publications in national

and regional languages. Thirdly, Reliance Communications capitalised on the passions

of Indians when framing the advertisements. The campaigns had an emotional pitch,

piggy backing on Cricket and Bollywood (equivalent of Hollywood in India) thus

effectively connecting with almost every Indian.


For marketing promotions Reliance Communications again used unconventional

strategies. The mobile service was promoted aggressively through every marketing

channel. Huge signs were put up in front of every gas station and office space in

addition to the prime spots booked across India. The bulk purchase of signboards

ensured that the cost was lower as compared to that available to competitors. Reliance

Communications also utilised their tower by putting up glow sign boards on them which

lit up during the night – an innovative, but cost effective, strategy since most of the

towers were in highly populated and visible areas.

2.3.4 RWorld – Reliance Way of Putting the World in Your Hands

Another important marketing strategy that Reliance Communications used was product

differentiation by mixing data applications with voice. Through RWorld – an inbuilt Java

enabled feature of all Reliance phones – the company guaranteed download speeds of

up to 144 kbps from an applications suite which has over 120 applications ranging from

interactive guides such as TV programme guides and city guides, live news and TV

news clips from Indian news channels like NDTV, CNBC, Aaj Tak and India TV to

contests, video songs, ring tones, cricket information, women’s world and kids world.

Reliance Communications did not stop at this. Through the Dhirubhai Ambani

Developers Programme (www.dadp.com), it aimed at opening Reliance

Communications platform, on an open source basis, so that ideas can be converted into

applications – where the power of thousands of minds could be harnessed to create

unique products and services. These Dhirubhai Ambani Developers converted ideas


into products as Reliance Communications provided the infrastructure, unlimited access

to comprehensive technical documentation and support and special rate plans designed

for the developer community. According to Reliance Communications, this programme

was aimed at creating wealth for 100,000 young developers who could leverage their

success in India to win markets globally. Over 16,000 individual developers and 800

Independent Software Vendors (ISVs) in addition to scores of small and medium

enterprises have so far enrolled in the programme.

2.3.5 Product Innovations – Connecting with Every Section of Society

Reliance Communications leveraged its product innovations skills, applications

development skills and partnerships to find new solutions to conventional and

contemporary problems – from managing queues in temples, and connecting all police

stations, to delivering e-governance solutions to citizens. Reliance Communications

applications also facilitated the provision of educations and health to rural areas at an

affordable prices. Reliance Communications attempted to offer something for every

section of the society. In a significant initiative to connect with the huge farmer and

trader community of India, communities that are traditionally left out of

telecommunications strategies, Reliance Communications brought the Mandi (market)

onto mobile handsets. The company tied up with National Commodity & Derivatives

Exchange Limited (NCDEX) to disseminate its spot and future commodity prices

through its RWorld suite of mobile applications. “The joint venture is a major step taken


by NCDEX and Reliance Communications in providing a convenient way to access

commodity prices,” said Mr Narendra Gupta, Chief Business Officer, NCDEX Limited31.

To tap into the retailer community Reliance Communications deployed India’s first

wireless Point of Sale (POS) terminal for processing credit card transactions in July

2003 in association with HDFC Bank – an important milestone in the history of retail

credit in India. Wireless POS enabled banks to expand exponentially the number of

merchant outlets accepting credit cards and speed up penetration of credit card

services to smaller towns. To connect with vehicle providers Reliance Communications

introduced the Vehicle Tracking System. Reliance Communications Vehicle Tracking

system provided real time tracking and monitoring of road consignments and vehicles

across India from anywhere and anytime32.

Through RConnect services, Reliance Communications offered India’s only nationwide

wireless Internet connectivity by leveraging its pan-India high speed CDMA2000 1 X

wireless network. RConnect helped Reliance Communications to connect to the

growing community of Internet users, enabling Reliance Communications to gain over

300,000 subscribers in less than seven months. Subscribers could connect to Internet

‘on the move’ at data speed of up to 144 kbps from their laptops or other mobile

computing devices using an RConnect cables with their Reliance phones.
31
N/A. (2004). “Reliance Infocomm brings MANDI on mobile phones”.

32
N/A. (2003). “Reliance Infocomm successfully deploys India’s first wireless POS terminal for credit card

processing”.


2.3.6 Customer Service – Icing on the Marketing Cake

Reliance Communications followed up the product innovation and marketing tactics with

good customer service. A 24/7, 365 days a year customer service was set up in a

central location in Mumbai. Taking into consideration the languages and cultural

diversity of India, customer service was offered in ten languages. This ensured that

many customers, who are primarily people without much fluency in English, have a

smooth experience. Additionally the company set up customer service departments in

every town and tied up with 10,000 retail chain services. While other mobile operators

took more two days for initial service provision, Reliance Communications ensured that

customers could walk into any of its retail outlets and buy a fully provisioned mobile

phone within fifteen minutes.

2.4 Tackling The Problem Phase

The success of Reliance Communications and its impact on the Indian mobile

telecommunications industry does not mean that the growth of the company was

without problems. Control issues and performance problems forced Reliance

Communications to phase down the Dhirubhai Ambani Entrepreneurs, who paid around

Rs. 10,000 (GBP £ 147) each to obtain dealerships, to a few thousands by April 2003,

about a year after the launch33.

33
N/A. (2003). “Reliance Info to phase down Dhirubhai Ambani Scheme”.


Reliance Communications was much criticised for circumventing many of the existing

telecommunication policies in a ruthless manner. According to the Telecom Regulatory

Authority of India (TRAI), WLL mobility should be within the local area, that is in a range

of about 20-25 kilometres with no roaming. Reliance Communications overcame the

policy shackles and roaming problems associated with limited mobility by enabling

customers to use the same handset in areas other than where it was registered.

Through a multiple registration scheme, it provided connection to the Reliance

Communications network in other areas. This led the Department of Telecom (DoT) to

issue a notice to Reliance Communications to discontinue offering roaming like services

on its WLL mobile phones. Reliance Communications got into many more legal

difficulties with the policy-making body, the incumbent operator and the other operators

in the Indian telecommunication sector. But eventually strong political clout and lobbying

saw it through. Though opposed by the GSM Cellular lobby, based on the

recommendation of the TRAI, as approved by the group of Ministers on telecom and

then the cabinet, the Unified licensing was introduced in India, benefiting Reliance

Communications the most. The Unified licensing allowed Reliance Communications,

which held the Limited Mobility license, to migrate to the new regime to offer both basic

and mobile services, putting it on a par with the other operators in India34.

The Monsoon Hungama scheme fetched one million applications within the first ten

days of its launch, but this did not happen without problems. “This unprecedented

34
N/A. (2003). “DOT asks Reliance Info to stop roaming, multiple registration”.


response gave rise to logistics, billing and collection problems” said by the former

Chairman, Mukesh Ambani, at the Reliance Industries’ annual general meeting.

Reliance Communications provisioning for bad debts for the year 2003-2004 amounted

for sixteen percent of service revenues, among the highest in the industry, according to

telecom experts. “This lends credence to the rumours in the market that many

customers were cheating the company by disappearing, not paying up, not even

receiving bills, and so on,” said an analyst with a brokerage firm35.

Reliance Communications also saw a leadership crisis emerge between the Chairman –

Mukesh Ambani and Vice Chairman – Anil Ambani, when Anil Ambani claimed an

independent stake in the running of Reliance Industries. The crisis emerged during

March 2004 and assumed a high profile in media and public spaces during December

2004. April 2004 to June 2005 witnessed a situation where Mukesh Ambani, who until

then led every decision at Reliance Communications, withdrew from day-to-day

operations, focusing on untangling the crisis. As a result Reliance Communications

slipped to the second place in the terms of subscriber numbers among the Indian

mobile operators36.

Still, Reliance Communications played a major role in ushering in a new era in Indian

telecommunications. Despite the problems, Reliance Communications remains one of

35
N/A. (2004). “Relinace Info bad debts at 16pc of service revenues”.

36
N/A. (2004). “The Ambani fight began in 2003”.


the front runners in the Indian telecommunication industry. The marketing channel

problems have been tackled and the company currently has a strong mix of own and

outside channels including Dhirubhai Ambani entrepreneurs, direct sales agents,

retailers, Web-Worlds and Web-World Expresses. Reliance Communications has

licenses to offer telecom services in twenty out of twenty two circles under the Unified

Access license. In addition, it has received a letter of intent from the Jammu and

Kashmir circle. This has enabled the company to offer services across the length and

breadth of India’s vast geography through its next generation fibre optic network

backbone spanning 60,000-route km. Reliance Communications has recovered a high

percentage of the bad debts. Also the fact that Reliance Communications had taken out

insurance on the handset it was selling to customers on an instalment basis worked in

its favour.

In January 2004, Reliance Communications acquired 100 percent of the undersea cable

company, FLAG Telecom for GBP £ 155 million. This acquisition provided Reliance

Communications with an international gateway to global markets. The FLAG acquisition

also means that Reliance Communications is the only Indian mobile operator to own an

international undersea cable network with a global footprint37.

Trust in the Reliance mobile brand was confirmed as it emerged as the most trusted

telecom brand in India. The control of the company has been taken by Anil Ambani who

has confirmed Reliance Communications commitment to put the power of information
37
N/A. (2003). “ Reliance signs amalgamation agreement to acquire Flag Telecom Group Limited”.


and communications in the hands of all people at an affordable cost. He continues to

believe that this will help empower them and overcome the handicaps of literacy and

lack of mobility.


3.0 Methodology

3.1 Research Methods

This research is based on primary and secondary data. Self Administered delivery and

collection questionnaires were valuable for obtaining sufficient primary data that has

been quantitatively analysed with consideration of the effectiveness of the

questionnaire. The questionnaire designed for the survey was first pilot tested. The

primary research was designed to collect information from the Reliance Mobile users

and Non-Reliance Mobile Users.

This research collected information from both Reliance Mobile users and Non-Reliance

Mobile users to test the relevance of some of the conclusions drawn from the literature

review. The actual design is detailed in appendix four. The researcher was able to

collect a wealth of information from the questionnaire which was designed for this

research, but also importantly keeping the questionnaire to a reasonable length. By

collecting information from both Reliance Mobile users and Non-Reliance Mobile users

the researcher was able to gain the valuable insight into the perception of each.

The final stage of the primary research was to visit the Reliance Web World in

Ghaziabad, Uttar Pradesh, India on the fifteenth of February 2010. During this visit the

researcher was able to spend a considerable amount of time discussing the Reliance

Communications background, services and facilities offered with both the company

officials and customers present at the Reliance Web World. This helped researcher to


have a great clarity and understanding of the work being done, as well as validating the

areas that researcher had chosen to study.

For the primary research the researcher sampled eighteen Reliance Mobile users and

twelve Non-Reliance Mobile users, which seems a reasonable figure considering the

logistics involved and the difficulty of contacting and obtaining information from both

Reliance Mobile users and Non-Reliance Mobile users. Considering the explorative

nature of this research and the qualitative information collected the researcher believes

this adequately fulfils the requirements of this research. Overall the researcher would

consider the methodology to have been successful and to have largely drawn the

results and collected the information which was collected.

3.2 Data Collection Techniques

Survey strategy is the most appropriate technique for this research because of its

deductive approach. Survey strategy is also very common strategy in business and

management research. It allows large amount of data from a considerable population in

an economical way. In a survey, data can be easily standardised in the form of

questioning that allows easy comparison and analysis. Survey strategy gives more

flexibility and control over the research. It is also easily understood so survey strategy is

perceived as commanding. The data collected through the survey can be easily

analysed through available statistical programmes.


3.3 Limitations to the research

The potential problems that might have occurred with the primary research would have

been the collection of primary data as the consumers here in UK are not familiar with

the services and transformation that Reliance Communication brought to Indian

consumers. So to overcome this problem a questionnaire was designed specifically

targeting Indian consumers who are either the users of Reliance Mobile services or are

Non-Reliance Mobile services users and the questionnaire was carried out between

eighth of February 2010 and eighteenth of February 2010 in Ghaziabad, Uttar Pradesh,

India.

The samples of both Reliance Mobile services users (eighteen users) and Non-Reliance

Mobile services users (twelve users) are both relatively small. This small sample size

was a result of the difficulty in contacting Reliance Mobile users (as mentioned in the

methodology); Non-Reliance Mobile users were particularly difficult to contact, as they

did not demonstrate the same enthusiasm compared to Reliance Mobile users. As the

sample size is not statistically significantly, which is the main limitation to the research,

the results can only provide an indication of what may be happening.

The survey for Reliance Mobile service users was designed to include the majority of

questions on Reliance Communication’s role in Indian telecommunications market,

however if the researcher was to do this study again then the researcher would change

this to include equal numbers of questions relating to Reliance Communication’s and


other players which were involved in the transformation phase of Indian

telecommunications industry.


4.0 Results and Findings

After carrying out the survey for both the Reliance Mobile users and Non-Reliance

Mobile users the following results have been concluded.

As far as the age group is concerned the majority of the respondents were aged

between eighteen to twenty nine around forty percent of them followed by respondents

aged between thirty to thirty nine around thirty percent of them, twenty percent of the

respondents were aged between forty to forty nine and the last ten percent of the

respondents were aged above fifty. So here we can clearly see the divide between the

users as majority of the user are eighteen to twenty nine which clearly shows that the

Reliance Mobile services are more appealing to younger clientele for graphical

illustration (appendix one).

With reference to the Reliance Mobile user section the responses of the survey

questions, for question one the around thirty two percent of the respondents have

replied that they are using Reliance Mobile services for over seven years, followed by

the new addition of around twenty nine percent which have started using Reliance

Mobile services in last one to two years, around twenty one percent of respondents

have replied that they have been using the Reliance Mobile services for three to four

years and finally there are about eighteen percent respondents which replied that they

have been using Reliance Mobile services for about five to six years for graphical



In question two, respondents were asked how they heard about the Reliance Mobile

services so around fifty percent of replies were related to adverts which were further

broken down into sub-categories of newspaper ads which amount for twenty percent,

Television ads which amounted for twenty five percent and Magazines ads which

amounted for five percent. Rest of the respondents to this question replied that they

were introduced to Reliance mobile services by their friends around fifteen percent and

around thirty five percent of respondents were introduced to Reliance Mobile services at

the company share holder meeting. If we try and relate these responses to literature

review section – customer generation – tapping into internal resources and advertising –

educating masses and evoking passions so we can clearly see the strategies which

were used by Reliance Communications clearly worked for the company for graphical


In question three, respondents were asked what was the reason behind their choice of

Reliance Mobile services over other service providers? In reply majority of respondents

around forty percent said because of value for money, followed by thirty five percent of

respondents which replied because of offers and bundles and around twenty percent of

the respondents replied because of the brand image of parent company. So here also if

we try and relate the literature review section – pricing strategy – Dhirubhai Ambani

Pioneer offer, Monsoon Hungama scheme and the vision of the founder to make latest

telecommunication technologies available to every Indian for price of a post card have

also helped the company to win customers and their loyalty towards the company and

the ‘Out of Box’ thinking used by the company as well for graphical (appendix one).

In question four, respondents were asked in what way do think that Reliance mobile

services are better than its competitors? In reply majority of respondents around thirty

percent said due to customer service and same amount of respondents said because

Reliance Communications also keeps up with the new technological trends and make

them available cheap to its customers than any other service provider. So if we try and

relate these responses to the literature review section – customer service – icing on the

marketing cake where Reliance communications introduced a 24/7 and 365 days a year

customer service where company considered the language and cultural diversity of

India and introduced the service in ten languages as this ensured that many customers,

who are primarily people without much fluency in English, have a smooth experience.

So this strategy also worked in the favour of Reliance Communication. The rest of the

respondents around twenty percent said because of the transparency in tariffs and

service quality offered by Reliance Communications was the major factor for them to

conclude that Reliance Mobile services are better than its competitors for graphical


In question five, respondents were asked if they think that Reliance Communications

have transformed the Indian mobile industry since its launch. In reply vast number of

respondents replied yes around seventy five percent of them, around fifteen percent of

them replied no and rest of them replied not sure around ten percent for graphical



In question six, respondents were asked according to them which telecom company in

India is the biggest competitor of Reliance Communications? In reply majority of

respondents around forty percent of them said that Bharti Airtel is the biggest competitor

followed by companies like Vodafone twelve percent, Tata Communications ten

percent, Aircel eleven percent, Idea Cellular and Tata Teleservices six percent each

followed by Virgin Mobile four percent and NTT DoCoMo two percent. Here if try and

relate this figure to the actual figures released by the Telecom Regulatory Authority of

India (TRAI) in appendix five we can see the clear difference as Bharti Airtel has over

110 million subscribers and Reliance Communications have just over 86 million

subscribers for graphical illustration (appendix one).

In question seven, respondents were asked if they think that the strategies used by

Reliance Communications competitors are the reason for the loss of market share by

company. In reply around sixty percent of the respondents said yes, followed by twenty

five percent of the respondents which said no and around fifteen percent of the

respondents said they were not sure about the reason behind this. If we try and relate

this question to recent changes in the market share figures in appendix five released by

TRAI we can clearly see Bharti Airtel is leading the way in the Indian mobile market for

graphical illustration (appendix two).

And finally in question eight, respondents were asked if they are satisfied with Reliance

Mobile service? In reply huge number of respondents around eighty five percent of them

said yes followed by ten percent of respondents said no and rest of the respondents


around five percent were not sure. So here also we can see majority of the respondents

are satisfied with the Reliance Mobile service with a very small figure of respondents

disagreeing for graphical illustration (appendix one).

With reference to the Non-Reliance mobile user category, the first question in this

section is to identify if the respondent actually uses the mobile phone as part of his/her

job or at home. In reply around ninety percent of the respondents said yes and a small

amount of respondents around said no. The respondents who replied no were

requested to stop and not to carry on with the survey as these respondents were

irrelevant to the survey for graphical illustration (appendix one).

In question two, respondents were asked what mobile network do they use. In reply

around fifty percent of the respondents said Bharti Airtel followed by BSNL ten percent,

Idea Cellular eight percent, Vodafone seven percent, Aircel six percent, Tata

Communications five percent, Tata Teleservices four percent, Virgin Mobile three

percent and NTT DoCoMo two percent. Here also we can see Bharti Airtel is the biggest

competitor of Reliance Communications and this fact is also confirmed by the survey

respondents for graphical illustration (appendix one).

In question three, respondents have been asked the reason why they have chosen the

above service provider in comparison to Reliance Mobile services? In reply around fifty

percent of the respondents have replied the mobile phone service they use is provided

by the company they work for, followed by around forty three percent respondents who

said that they use other service provider because they get a better service somewhere


else and around seven percent of respondents said the mobile phone service they use

is provided by their parents. In this question two trends emerge company provided and

better service. In this situation Reliance Communications must be failing to deliver the

perfect service and lack of corporate packages for graphical illustration (appendix one).

In question four, respondents were asked would they switch to Reliance Mobile service

if better services and offers are provided to them at lower cost. In reply a large number

of respondents around sixty eight percent replied yes followed by around twenty two

percent of respondents which replied no and around ten percent of respondents replied

that they are not sure. In this situation Reliance Communications have to make efforts

to lure these customer to its network for graphical illustration (appendix one).

And in question five, respondents were asked what steps Reliance Communications

should take to increase its market share? In reply around forty percent of respondents

have said that Reliance Communications should be the first telecom company to

introduce the 3G technology as the Government of India announce the spectrum

allocation, around thirty percent of respondents which replied that there is a need of

more regional call centres as the company have expanded pan-India since its launch in

December 2002. Followed by twenty percent of respondents which said Reliance

Communications should offer more offers and rest of the respondents around ten

percent said Reliance Communications should provide better service than its

competitors for graphical illustration (appendix one).


5.0 Conclusions

Reliance Communications stimulated telecommunication growth in India by challenging

many of the conventional practices in product design, distribution, sales, advertising and

pricing. Reliance Communications fashioned a strategy which was conceptually simple

but sweeping in its impact. While the competitors focused on the top segment of the

market, by charging a premium price, Reliance Communications sought to reduce the

cost to the consumer, thus focusing on a market driven by volume. While others saw

weakness of India as a market – widespread poverty an low levels of

telecommunication penetration – and Reliance as an old economy company focusing on

oil production and business-to-business clients – Reliance Communications realised

that these actually were strengths which it could tap into. Reliance Communications

managers saw that telecommunications would be much valued by the poorer sections

of society if it could be used to create opportunities and offered at affordable prices. The

company tapped into its strong political and financial clout to build up a strong

organisation that could push it through the legal and regulatory setup in India.

Reliance Communications is planning to consolidate its telecommunications evolution

through phases:

Firstly, the mobile revolution now reaching over 80 million subscribers will expand to

640,000 villages and to over 5,000 cities and towns. This revolution will create the

potential for every individual to talk, learn, shop, bank, transact, entertain and be

informed, while on the move.

Secondly, an enterprise Net-way revolution will bring the possibility to provide

broadband experience to every desktop and device in half a million enterprise buildings

initially and eventually to millions of commercial buildings. This will create the potential

to empower every enterprise by making transactions efficient, functions seamless and

new economic opportunities abundant.

And thirdly, a convergence revolution will provide high-speed networks to millions of

homes. This revolution will offer every home access to a wide range of television

channels, high-speed telephony, audio conferencing, videoconferencing and video on

demand.


6.0 Recommendations

After carrying out the research on role of “Reliance Communications strategy and its

impact on the Indian mobile telecommunications industry” following recommendations

have been concluded:

Reliance Communications have been maintaining their position as the second largest

mobile operator in India with its 86 million subscribers since September 2009 and Bharti

Airtel leads the way as the number one mobile service operator with its 110 million

subscribers. Indian mobile services market is very dynamic in nature and it is changing

very rapidly as more and more new entrants are entering the market with attractive price

plans and service bundles to gain market share for the established service providers

like Reliance Communications.

To weather this storm of new operators entering the Indian mobile market and stop

them from luring the valuable customer base of the company Reliance Communications

have to adapt new practices like offering new deals to corporate clients, offer new

payment plans, offer enhanced value added services to its product portfolio and

promote innovation and idea generation throughout the organisation. If the company

fails to take action on time regarding the market situation, the company poses a risk of

being either taken over by small players (in accordance of market share) or becoming

the victim of the industry which once it ruled.


Reliance Communications should adapt to following mobile features so the company

creates an edge over its competitors:

Reliance Communications should bring total transparency and therefore, offer a per

second pulse. As the customer will only pay for the second they use therefore,

customers only pay for what they use. The current charge is on per minute basis and

the customer loses the unused seconds. For example, at present if a customer makes a

twenty second call and they have to pay for one minute because the current mobile

service providers have a sixty second pulse. So customers using Reliance

Communications network will only have to pay for the seconds they use not for the

whole minute. International calls have always been high cost calls, so they should also

be charged as per second pulse rather than per minute pulse.

Pre-activated national and international and national roaming without rental should be

offered as standard to all customers so they can talk to their friends and family who are

based out of the town or out of country without have to worry about the connection

problems as some of the service might be restricted on their phones. Anywhere in India

top-up should be offered to customers so they can top-up their accounts with any

desired amount between Rs. 10.00 to Rs. 10,000.


References

Ashiwal, S. (2004). Reliance Infocomm unveils plans for prepaid service. Available:

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2010.

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Appendices

Appendix – 1 – Questionnaire results:

Sample age group:

Reliance Mobile user category:

Q – 1 How many years have you used Reliance Mobile Services?


Q – 2 How did you hear about Reliance Mobile Services?

Q – 3 What was the main reason for you to choose Reliance Mobile

services over other service providers?


Q – 4 In what aspects do you think that Reliance Mobile Services are better

than its competitors?

Q – 5 Do you think that Reliance Communications have transformed the

Indian Mobile industry since its lauch?


Q – 6 From the following telecom companies which one do you reckon is

the biggest competitor of Reliance communications?

Q – 7 Do you reckon the strategies which were used by Reliance

Communications competitors are the reasons for the loss of market share

by company?


Q – 8 And finally, are you satisfied with Reliance Mobile services?

Non-Reliance Mobile user category:

Q – 1 Do you own/use a mobile phone either part of your job or at home?


Q – 2 What mobile network do you use?

Q – 3 Why have you choosen the above mobile service provider in

comparision to Reliance Mobile services?


Q – 4 Would you likely to switch to Relinace Mobile services if the offers

and/or better are provided to you for lower cost?

Q – 5 And finally, according to you what Reliance Communications can do

to increase its market share and improve its services?


Appendix – 2 –Fifth largest telecom operator in the world:

(Source: Reliance Investor Presentation 2009)

Appendix – 3 –Targets the largest untapped population in the world:

(Source: Reliance Investor Presentation 2009)


Appendix – 4 – Questionnaires

Appendix – 4.1 Reliance Mobile User Category Questionnaire:

Q – 1 How many Years have you used Reliance Mobile services?

1 – 2 Years ( )

3 – 4 Years ( )

5 – 6 Years ( )

7+ Years ( )

Q – 2 How did you hear about Reliance Mobile services?

Adverts ( )

- Newspaper Ads ( )

- Televison Ads ( )

- Magazine Ads ( )

Friends ( )

Company share holder meeting ( )

Q – 3 What was the main reason for you to choose Reliance Mobile services over other

service providers?

Value for money ( )

Offers and Bundles ( )

Brand image of parent company ( )

Q – 4 In what aspects do you think that Reliance Mobile services are better than its

competitors?

Customer service ( )

Service quality ( )

Transparency in tariffs ( )

Keeping up with latest technological trends ( )

Q – 5 Do you think that Reliance Communications have transformed the Indian mobile

industry since its launch?

Yes ( )

No ( )

Not Sure ( )

Q – 6 From the following telecom companies which one do you reckon is the biggest

competitor of Reliance communications?

Bharti Airtel ( ), BSNL ( ), MTNL ( ), Tata Communications ( ), Aircel ( ), Idea Cellular

( ), NTT DoCoMo ( ), Tata Teleservices ( ), Vigin Mobile ( ), Vodafone India ( ).


Q – 7 Do you reckon the strategies which were used by Reliance Communications

competitors are the reasons for the loss of market share by company?

Yes ( )

No ( )

Not Sure ( )

Q – 8 And finally, are you satisfied with the Reliance Mobile services?

Yes ( )

No ( )

Not Sure ( )

Please Stop here. Thank you for you time in filling out this questionnaire.

Appendix – 4.2 – Non-Reliance Mobile User Category Questionnaire:

Q – 1 Do you own/use a mobile phone either part of your job or at home?

Yes ( )

No ( ) – please stop here.

Q – 2 What mobile network do you use?

Bharti Airtel ( ), BSNL ( ), MTNL ( ), Tata Communications ( ), Aircel ( ), Idea Cellular

( ), NTT DoCoMo ( ), Tata Teleservices ( ), Vigin Mobile ( ), Vodafone India ( ).


Q – 3 Why have you choosen the above mobile service provider in comparision to

Reliance Mobile services?

Better service ( )

Company provided ( )

Provided by parents ( )

Q – 4 Would you likely to switch to Relinace Mobile services if the offers and/or better

are provided to you for lower cost?

Yes ( )

No ( )

Not Sure ( )

Q – 5 And finally, according to you what Reliance Communications can do to increase

its market share and improve its services?

More offers ( )

Better service ( )

Regional call centres ( )

Introduce 3G technology ( )

Please stop here. Thank you for time your in filling out this questionnaire.


Appendix – 5: Subscriber numbers (millions) by service provider

Service June 2003 Sep 2003 Dec 2003 Mar 2004 Mar 2005 Sep 2009

Provider After After One Year After Pre- One Year Current

Pioneer Monsoon After Paid After Pre- Scenario

Scheme Hungama Launch Launch Paid in Market

RCOM 1.82 4.20 6.24 7.26 10.45 86.12

Bharti 3.75 4.62 5.50 6.50 10.98 110.51

BSNL 3.19 4.04 4.94 5.53 9.90 58.76

Vodafone 2.62 3.22 3.77 5.15 7.80 82.85

MTNL 0.29 0.31 0.42 0.46 1.08 4.68

BPL 1.17 1.31 1.54 1.88 2.58 2.50

TATA 0.2 0.4 0.56 0.63 1.09 46.80

Total 17.32 23.03 28.44 33.69 52.22 471.73

(Source: TRAI Documentation)


Appendix – 6: Strategy Competitive Advantage

Competitive Advantage - Definition

A competitive advantage is an advantage over competitors gained by offering

consumers greater value, either by means of lower prices or by providing greater

benefits and service that justifies higher prices.

The differentiation and cost leadership strategies seek competitive advantage in a

broad range of market or industry segments. By contrast, the differentiation focus and

cost focus strategies are adopted in a narrow market or industry.

(Source: Tutor2u.net)


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