Strategic Analysis of Reliance Jio Infocomm Limited
Competitive Position Assignment - Coursera
In this report, strategic analysis has been done for “Reliance Jio Infocomm Limited” (termed
as Jio in the report). Aim of the analysis is to ﬁnd whether the ﬁrm would be able to sustain
its growth for a long time in the Telecommunications industry considering its high
Jio is a LTE mobile network operator in India which recently thrilled the whole telecom
market in India after launching its 4G services. Its a subsidiary of Reliance Industries Ltd.
owned by Mukesh Ambani. Before the launch of Jio, another venture by his brother was
operating by the name of Reliance Communications.
Before diving into the ﬁrm, let’s ﬁrst have a look at the telecom industry in India, especially
the mobile network operators. India currently has about 1 billion mobile phone subscribers,
which is Second largest in the World. Such a big consumer market tend to attract new ﬁrms
and investors. The recent rise of interest for high speed mobile internet along with increasing
rate of urbanisation assures that this industry will have highly increasing growth in coming1
years. Moreover, mission of Digital India by Government of India has added cherry on the
cake. Please see Exhibit 1 for more information.
World Fact-book by Central Intelligence Agency: https://www.cia.gov/library/publications/the-world-factbook/1
Source : https://yourstory.com/2015/11/india-internet-user-base-2015/
But if look at Exhibit 2, we can clearly see that this is highly competitive industry. There are
more than 10 service providers out of which more than 60% market share in terms of
subscribers lies in that hand of 3 leading ﬁrms - Bharti Airtel, Vodafone and Idea. So it may
seem but its not that easy to earn proﬁts in this industry. Huge initial capital investment and
high sunk costs along with government regulations regarding selling of spectrum bands
decreases the risk of entry of new ﬁrms. But on the other hand, low switching cost(due to
Mobile Number Portability) , availability of information of multiple options increases the
bargaining power of buyers. Bargaining power of suppliers is quite low as these ﬁrms mainly
require sim card manufactures and tower operators which because of low product
differentiation and large number of suppliers are not able to bargain much. Further looking at
the substitutes, the risk is kind of moderate. Coming up of free voice call services by
WhatsApp and other similar apps have increased the risk, but since these are internet calls,2
ﬁrms can still continue to earn proﬁts from internet services. Intensity of rivalry in the
industry is very high and new entrants tend to face retaliation.
Jio started its services from mid 2016 and has gained a huge customer base in short span of
time. Since the telecom industry is a very competitive Jio used the low cost strategy while
launching its services. In order to increase their subscribers and gain popularity among them,
they announced free voice calls and unlimited internet services for a period of 5 months
which was later increased to 8 months. As per the data by Telecom Regulatory of India, Jio
has made a 3% subscriber base with a huge growth rate as compared to already existing big
players in the market (Refer to Exhibit 1 and Exhibit 2).
But continuing like this would end up in no proﬁts. But if we look at the plans they are3
offering, we will ﬁnd that they are kind of exploiting the differentiation strategy. The
minimum plan starts from 19 INR and goes upto 1500 INR. The people after getting
accustomed to high speed 4G data and free voice calls would willing to pay for their services.
Customers would to be forced to subscribe for high rate plans since the lower ones have less
validity as well as offerings which will ultimately lead to proﬁts for the ﬁrm.
Exhibit 5 presents the capability analysis of Jio. The top most capability that Jio and no other
telecom currently has is the 2.5 lakh kilometres long network of ﬁbre-optic cables, covering
18,000 cities and over one lakh villages, all over the India and they are planning to cover 100%
of nation’s population by 2018. This makes them largest 4G network in India. Jio holds4
spectrums of 850MHz, 1800MHz and 2300MHz which helps in maintaining seamless
congestion free 4G network with large capacity. As they have already laid down the optical
ﬁbres, it would be very easy for them to implement 5G or 6G technology as soon as it comes
to the market. On the other hand, its competitors are still struggling to establish 4G networks.
Jio is using the VoLTE technology for voice calls which is to make calls over internet which
helps in reducing their carrier charges as compared to other market operators. Moreover, they
have also launched their own affordable smartphones in order to gather more and easy
revenue. As Jio is subsidiary of Reliance Industries Ltd. they have huge funding easily
available for further investments which might not have been a case with any other early stage
Its been less than a year that Jio launched its services and nothing is clear about their
revenues earned so far. But looking at core capabilities, we can assure that they will surely
earn huge proﬁts and other competitors will need to work hard to compete against them.
Exhibit 1: Mobile Network Operator Industry Analysis
Exhibit 2: Access Service Provider-Wise Market Shares in term of Wireless Subscriber Base
as on October 31, 2016.5
Demographic Trends Socio-Cultural Inﬂuences
* Increase in interest for high speed mobile
* Increase in urbanization rate.
* 1 billion mobile phone users (Second largest in
Technological Developments Political-Legal Pressures
4G LTE , 5G, Optical Fibre Mission of Digital India by Government of India
Macroeconomic Impacts Global Trade Issues
Revenue from Telecom industry was USD$19
Billion in FY15.
Bharti Airtel Vodafone Idea BSNL
Aircel RCom Tata Telenor
Jio Sistema MTNL
Exhibit 3: Access Service Provider Wise Monthly growth rate of Wireless Subscriber base
in the Month of October, 2016. 6
Exhibit 4: Five Forces Analysis
* High sunk costs (+).
* Government and legal barriers (+).
* Pre-commitment contracts (+).
* Retaliation by existing ﬁrms (+).
* Large number of competitors (-).
* High exit costs (-).
* Low Switching cost (-) .
* Information easily
available (-) .
* Less ability of buyers to
integrate backward (+).
* Numerous options
available for buyers (-).
* Differentiated services (+).
* Low product
* Free calls services by messengers like
* No threat of forward integration (+).
Exhibit 5: Capability Analysis of Jio
* Unique work culture and Leadership
* Decision are taken at apex of organisation
* Already established in other sectors of economy
* Large Optical ﬁbre Network and bandwidth
* VoLTE Technology
* Ready for future technologies of 5G, 6G
* Free home delivery of sim cards
* Large number of stores.