A small study of Reliance Jio

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Reliance Jio, India - The Market
Disruption of the Decade
Base of the Pyramid - Case Study
By: Akancha Verma

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About Reliance Jio
Reliance Jio Infocomm Ltd. aka ​Jio​ is an Indian telecom venture of Reliance Industries
Limited founded by Mukesh Ambani. Their product portfolio includes Fixed and Mobile
Telephony, Wireless Broadband, Internet Services and OTT Services.​[1]
Telecom Industry - India​ is also the world's second-largest ​telecommunications
market. The total subscriber base in the country stood at 1,167.81 million with a
tele-density of 86.23%, as of August 31, ​2020​. Gross ​revenue​ of the ​telecom sector
stood at Rs. 66,858 crore (US$ 9.09 billion) in the first quarter of FY21.​[2]
The Base Of Pyramid in India
India’s base of the pyramid in accordance to the wealth distribution is unevenly divided
and 78% of the population owning wealth less than $10,000. This 78% of population is
equivalent to ​~675.5 million ​people and it is a huge market opportunity distributed
across urban and rural parts of India. Lower wealth distribution i.e. less that $10,000
implies low annual income.
India’s BoP is full of market opportunities and companies can target this demographic
by innovative business models which can serve the needs of consumers and create
huge profit pools for organisations. Companies need to devise pragmatic strategies to
serve this unique market and its needs. Overall focus of the sustainable product and
services offerings to this segment should be on ​[3]​
:
● Price of the product - Optimal cost of the product according to the purchasing
limits of low income consumers
● Scalability of the solution - Capable to meet the high demand of BoP
● Environmental sustainability - w.r.t energy, water and raw material
● Advance technology to adapt local conditions of BoP
The Amalgamate of Dream and Business Strategy
“Dream to provide every Indian with access to affordable and comprehensive
telecommunication service” Mukesh Ambani
The most innovative business strategy of the decade originates from the dream
of Mukesh Ambani to ​connect India digitally​. In order to fulfill his dreams
Mukesh ​launched 4G in September 2016 offering free voice and data services until
March 2017 which created a huge market turbulence for its competitors. Jio announced
acquisition of 16 million customers in the first month and 50 million in 83 days of its
launch.

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The Market Disruption of the Decade and competitive position climbing from number 7
in 2016 to number 1 in 2020
Table 1.1 Growth in Jio’s Wireless Subscribers​[4]​ ​[5]
High Level Business Strategies:
Dirt-Cheap Pricing Strategy ​- Mukesh Ambani's target was to capture
consumers at the Base of Pyramid in India and become a pioneer telecom
vendor capturing highest market share in industry. In order to achieve this he
offered free calls and data available for the first six months.​ After free services,
Reliance Jio offered​ aggressive pricing​ which reduced the total telecom spend by
41%. The demand for data and talktime increased drastically from 2017.
Table 1.1 portrays the evidence of disruption created by Reliance Jio in the telecom
industry by offering free services. From 6.26% market share in 2016 to a dominant
position acquiring​ 34.36% of market share in 2020​ in 4 years is a huge leap. Currently
they have ~388 million subscribers in India and revenue of US$ 3 billion. Jio was super
successful in capturing Base of the Pyramid of India and almost every home had a Jio’s
mobile subscription. Offering free services, Jio’s main source of revenue were Jio
applications and Jio phones which created huge profit pools based on volume.
Scalable Solution and Local Adaptivity ​- Acquisition of Infotel who had 4G license
and the smart decision to use voice on this data spectrum enabled Jio to roll out
scalability. They used technical innovation i.e. 4G that can provide voice and data to
scaling demand of Base of the Pyramid. From urban to rural parts of India, Jio used the
shared network coverage provided by various vendors which enabled them to reach
North-South-East-West locations providing huge coverage across India.

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Below picture depicts Reliance Jio’s strategy to focus on BoP which made them a
leader as a telecom vendor capturing more than 50% of the market share in wireless
internet subscription. Wireless Internet subscription includes mobile data subscriptions
and public wifi usage.
Figure 1.1 ​[6]​ ​[7]
The Reliance Jio Effect - Value added to the society
and organization
Impact on Industry​ - The Indian telecom industry will never be the same again
because of the Jio effect. It led to competitors merger and acquisition to fight against
Jio. Airtel acquired Telenor and Vodafone & Idea merged together to jointly compete
and make profit. But Jio continued to provide ​cheapest data across world only at
$0.09 per GB ​a month.​[8]
The Ripple Effect: Impact on Society​ - Growth of telecom in any country/city has
always led to the development of other industries. Telecom industry contributes to 8.2%
of the total GDP of India. The cheap mobile subscription from Jio contributed to digital
transformation and societal growth, especially in rurals parts of India. Everyone in the
ecosystem was benefited due to Jio effect and its digital offerings:
● Agricultural training to farmers by various digital means
● Online education - Playing very important role in Covid

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● Social Media expansion - Whatsapp, facebook, Twitter
● Online Banking and Shopping
● Job search and career planning
● Entertainment
● Others
Why Jio contributed to the ripple effect​ - The consumers at the Base of Pyramid are
low income people who generally don't have laptops/desktops. However due to very
cheap offerings from Jio, they could afford mobile phones which became a primary
source to connect to the internet and consume online content.
Jio Impact on Reliance Industry Limited (RIL) -
Reliance Jio, a telecom/digital service venture from RIL, captured majority shares in the
market. Jio doubled up its revenue in 3 years and proved itself to be financially
beneficial because of its aggressive strategies to serve BoP of India.
Figure 1.2​ ​[9]​ ​[10]
Conclusion
The aggressive price-based business strategy to capture the consumers at BoP was
super successful from 2016 until now. Jio not only acted as a platform for uplifting
societal values but also made impressive profit sweeping its competitions from focus.
Jio’s strategies were indeed a win-win proposition befitting company and consumers at
BoP.
The future Sustainability of Business Model​ - The volume game and dirt-cheap
prices of Reliance Jio may face challenges due to upcoming 5G technology. The
usecases of 5G require massive expenditure in the underlying telecom infrastructure.
This will definitely lead to price rise! Reliance Jio may choose to serve the first two
layers of the pyramid in the beginning which is mostly spread across metropolitan cities
and few urban cities in India.

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Reliance Jio will have to rethink strategies to cater 5G usecases to consumers in BoP in
coming years. The fact is, it is equally difficult for its competitors to think about a
sustainable business model to cater 5G, not sure if this puts Reliance Jio in a better
position even though there are upcoming challenges when the whole world is shifting
towards 5G!
References
[1]​
​https://en.wikipedia.org/wiki/Jio
[2]​
https://www.ibef.org/industry/telecommunications.aspx#:~:text=India%20is%20also%2
0the%20world's,the%20first%20quarter%20of%20FY21​.
[3]​
CSR and Sustainable Business by Lin Leopard, Magnus, Sara, Emm and Karolina
[4]​
https://www.trai.gov.in/sites/default/files/Indicator_Reports_Dec_16_07042017.pdf
[5]​
https://www.trai.gov.in/sites/default/files/Report_09112020_0.pdf
[6]​
https://indianexpress.com/article/india/india-personal-wealth-richest-millionaires-report-
6080333/
[7]​
https://www.trai.gov.in/sites/default/files/Report_09112020_0.pdf​ (Chart 1.19 :
Composition of Wireless Internet subscription)
[8]​
https://timesofindia.indiatimes.com/business/india-business/at-0-09/gb-indias-data-pla
ns-cheapest/articleshow/77728709.cms
[9]​
https://www.ril.com/ar2017-18/pdf/ril-annual-report-2018.pdf
[10]​
https://www.ril.com/getattachment/299caec5-2e8a-43b7-8f70-d633a150d07e/Annual
Report_2019-20.aspx