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Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by Sheenajain on Thu Sep 22, 2016 9:49 pm

Yes, According to me Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability as this effort is shaking up the telecom industry. Reliance Jio is giving affordable & simple tariff like No voice call charges(both STD & Local),No roaming charges,No high data charges,No blackout days. Jio also has announced free voice calls across network and data charges that are 30-50% lower than that charged by incumbents including Vodafone and Airtel. I would place telecom companies like Bharti Airtel,IDEA, Vodafone in Monopolistic Competition as:
No. of firms=Many
Elasticity of demand=Highly Elastic
Product Differentiation=High
In monopolistic competition as there are few sellers in the market and buyers have huge choice of what to buy, difference being only the prices offered by different companies.
I think Jio is using market penetration technique as a pricing strategy, as it aims to attract buyers by offering lower prices on goods and services. Many new companies use this technique to draw attention away from their competition.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by Nikita Garg on Thu Sep 22, 2016 9:53 pm

nowadays, internet has became an essential part of everybody's life. According to me,Reliance jio's aggressive pricing impact on other operators like Bharti airtel, Vodafone, Idea etc. as it is launched with a super fast and super cheap internet which has attracted a large number of people as nowadays internet is important for everybody. On the other hand, it will also change the paradigms for the telecom sector as they all have to lower their prices and provide data at very cheap rates and it will result to a great loss to other companies.
I will include telecom companies in oligopoly market structure because it is a market structure in which an action by one firm is likely to affect the rival firms. So, every firm keeps a close eye on the activities of rival firms.
They use market penetration as a pricing strategy and aim to attract more consumers by offering services at lower rates.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by simran sharma on Thu Sep 22, 2016 10:50 pm

rohit.bharwani wrote:YES it will have great impact on others operators like bharti airtel, vodafone &many others operators.As we all know reliance jio has come up with such a wonderful features like free call rates,free messages and they are charging Rs50/GB data as compared to others operators are charging very high rates. jio has entered in such a way that everyone is astonished it has a huge impact on companies profitability and sustanibility of others operators(airtel,vodafone,idea) as well as it will change the paradigms for the telecom sector.talking about the competiton in this case monopolistic competiton arises because there are few sellers in the market and consumers has choice what to buy the only difference is that only price level changes of different operators.


yes,i agree all the points given by you rohit,but there is one single point which i disagree is that yes it is imperfect market, but in imperfect its oligopoly competition instead of monopolistic competition.because the feature of oligopoly and reliance jio is that it has few no. of firms instead of large which is different from monopolistic competition which create difference in both market competition.





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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by Diksha Batish on Thu Sep 22, 2016 11:18 pm

In India, the telecom companies comes under Oligopoly competition using differentiated products. Oligopoly is a market structure where there are few sellers selling homogeneous or differentiated products. It is a competition among few firms in the market, the action of one firm is likely to affect the others.

Reliance Jio officially launched 4G services on September 5 this year and has unleashed a disruptive welcome offer of free voice calls and data services till December 31,2016 in its bid to grab 100 million customers soonest from incumbents.
According to me, the aggressive pricing strategy of Reliance Jio is going to impact the incumbents like Bharti Airtel, Vodafone and Idea but it is more likely to affect the small players than the market leaders. The stronger players will have an impact but it will be marginal and not as bad as the market is thinking.

The telecom sector seems to be currently reeling under financial stress, high debt burden and slowdown in revenue growth. However, the pricing strategy adopted by Reliance is Penetration Pricing wherein the prices are initially set low to lure the customers away from the competitors.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by REEMA SHARMA on Thu Sep 22, 2016 11:29 pm

Relaince jio has created threat in the market even before its launch and as a result of which various reputed telecom companies are forced to modify their prices to sustain the market competition. With its efficient market research it analyzed the data boom in the consumer behavior and hence focus on data packs and access,finally succeded in attracting the customer,increasing the revenue etc.Reliance jio is having non collusive oligopolistic completition as there are few number of sellers and large number of buyers with a heterogeneous product(variations in its services and rates).Currently its not focusing much on much on earning profit as in its introduction phase it is planning to capture the market share first.Hence it if following penetration pricing strategy and this is much needed as without having cheaper rates it could never enter and sustain in the competitive telecom sector.This strategy is completely viable and it would surely change the paradigm for telecom especially in short run and for long run nothing exact  can be predicted .

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by Ankita Garg on Thu Sep 22, 2016 11:35 pm

Oligopoly Competition is there in the telecom companies. Oligopoly Competition,in which there are few sellers and large number of buyers and one firm is largely interdependent on the policies of the other. Similar is the working of Telecom Industry in India where there only few sellers like Airtel, Vodafone, Idea, Reliance, BSNL, Aircel, Docomo etc. It is a non-collusive oligopoly because no cartels are formed in this sector and compete on price to some extend (very limited).
Reliance Jio is using penetration pricing strategy to gain more market share. Penetration pricing is a pricing strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth. The strategy works on the expectation that customers will switch to the new brand because of the lower price. This is exactly what Reliance is doing.
It is greatly influencing whole telecom industry. Idea and Airtel both have suffered a loss of 3528 crore and 8455 crore respectively now. Comapnies having small market share like Aircel, telenor etc are facing a grim future.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by simran sharma on Thu Sep 22, 2016 11:42 pm

Ritika wrote:Yes, In my point of view it will definitely effect the profit and the stability of the other companies like (vodafone, BSNL, Idea, etc) because jio has came into the market with the very attractive and different offer. It took a very great strategy in the market for the company's profit and it is becoming really very popular among all the customers.The reason behind its popularity is its price as it is available in the market at a very cheap price so there is no competition in the market now.At the end of the accounting year there will be almost 100 billion users of reliance jio.The competition will  begin when the other competitors will take another strategy in price to attract customer.


yes it's true that the idea used by mukesh ambani is very different which is impressing customers.This idea helps company to making profit through customers, by decreasing the price and increasing the customers.but As we all are thinking that the calls and messages are free but there isn't any thing like this.The cost is being incurred through the data recharge.so its not creating any difference among its price.




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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by NehaKumari on Thu Sep 22, 2016 11:49 pm

Reliance Jio is now very much aggressive and have serious impact on incumbent operators(vodafone,idea,bharti airtel).Because of its free service it has differentiated from other operators in the market which leads to monopoly.
Not only this it also affected the profitability and sustainability of others in telecom industry.This monopoly of Jio's attracts large numbers of buyers because of its differentiated services which is forcing the others to lower down its service costs.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by ashishgupta on Fri Sep 23, 2016 12:16 am

Reliance Jio's aggressive pricing could force other telecom firms to cut voice and data tariffs. The price war may strain finances of most telecom operators, who are already laden with high debt.Among telecom stocks, Bharti Airtel, the largest loserlost Rs 8,455 crore m-cap.According to quarterly reports for April-June quarter this financial year, the voice average revenue per user (ARPU) for Bharti Airtel declined by 6.3% to Rs.139 compared with the corresponding period of the last financial year. any further decline in data tariffs may affect operator’s profitability.“Reliance Jio’s price aggression is going to put pressure on both revenue growth and profitability of existing operators. Operators will not only be forced to relook at their tariff structures and customer retention strategy but may also be forced to bid more aggressively in the forthcoming spectrum auctions.
by doing this it has already changed the paradigm of this industry and now it is expected to be looked after in a different way. Right now a very tough competition is going between the other telecom operators as this innovation has lead everyone in a state of total competition .I would place this industry in monopolistic competition as there are many sellers selling differentiated products serving similar purpose.
they are using PENETRATION PRICING strategy

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by Ankit pareek on Fri Sep 23, 2016 1:52 pm

Yes according to me, r-jio's aggressive price are impacting the other operators very much as R-Jio Info comm kicks off its much awaited but delayed 4G services , shaking up the industry with free voice and dirt cheap data, which top rivals Bharti Airtel, Vodafone and Idea are facing huge loss in their own customer and they are being forced to react to, draining their finances.

Jio has filed its tariff plans with Telecom Regulatory Authority of India (Trai), promising free voice calls and mobile Internet at a fifth of current market rates along with a wide range of entertainment options once the free offer closes.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by manishnaruka on Fri Sep 23, 2016 1:53 pm

The entry of RJio, it said, will further accelerate data adoption with affordable 4G handsets and data tariffs. “As RJio commercial launch nears, we are seeing tariff cuts from the incumbents with free calling being bundled together with data for some select high value plans, while there are also data tariff cuts.”
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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by pitamber on Fri Sep 23, 2016 2:02 pm

Yes it will increase the market share of reliance industries shaking up the industry with free voice and dirt cheap data, which top rivals Bharti Airtel, Vodafone and Idea will be forced to react to, draining their finances.Experts believe Jio’s tariff offer of unlimited voice calls bundled with multiple data buckets will compel incumbents to cut call charges for retaining mid- to high-end average revenue per user generating customers and securing their voice business. It expects the weaker revenue growth for No.1 Bharti Airtel and third ranked Idea to lead to 7 per cent and 10 per cent cuts in earnings before interest, tax and 10 per cent and 65 percent cut in earnings per share, respectively. Bank of America- also expects the biggest incumbent operators to respond selectively with tariff cuts to prevent their subscribers from moving to Jio. Incumbents have been trying various data-pricing strategies to retain top-end users and have already cut effective rates. As the voice business plateaus, they have turned to pricier data services for growth and ramped up 3G/4G presence. Bharti Airtel and Vodafone India recently offered unlimited voice calls on high-value post-paid packs to retain higher revenue paying customers ahead of Jio’s launch. The two, along with Idea, have also slashed effective data prices by nearly 70 per cent on some plans. However, it’s not only incumbents that will have to deal with uncertainty. The going is unlikely to be easy for Jio and the shareholders of Reliance Industries Ltd (RIL) either. Aggressive pricing means that break-even will get delayed. On the launch day, RIL’s share price also dropped by close to 3%. Clearly, shareholders of existing operators are not the only worried lot. Jio is a huge diversification and its success will be critical for RIL and its shareholders. In my opinion I will place Telecom companies like Airtel, Idea,Jio etc.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by prashantnavlani on Fri Sep 23, 2016 2:04 pm

Yes ,Reliance Jio will have a very great impact on the other telecom sectors(Bharti, Airtel, Vodafone and Idea).It will influenced the market on the basis of pricing because reliance jio will offer many services with very less or no rates. Like it is offering free voice call till 31st,december 2016. And it will offer 4g data at a very less rate which will be 50 rs per gb and if one consumer consumes more data then he will be charged only 25 rs per gb.
Mukesh Ambani has said that jio target is to have more than 100 million users within march 2017.He adviced/informed all the employees in his companies to use reliance jio. And When he launched jio and mukesh ambani gave his speech,other companies suffered the loss of 13800 crore,their shares were down.Most of the users of Airtel, Bharti, Idea and Vodafone has switch over to reliance because of its attractive offers like No voice call charges(both STD & Local),No roaming charges,No high data charges,No blackout days.
It have changed the paradigms and even created its moving towards monopoly.This has forced other companies to reduce their price to be in the competitive which will reduce their profit or they will have even loss.


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You are right relaince mainly focused on to increase more and more user within march 2017

Post by manishnaruka on Fri Sep 23, 2016 2:06 pm

prashantnavlani wrote:Yes ,Reliance Jio will have a very great impact on the other telecom sectors(Bharti, Airtel, Vodafone and Idea).It will influenced  the market on the basis of pricing because reliance jio will offer many services with very less or no rates. Like it is offering free voice call till 31st,december 2016. And it will offer 4g data at a very less rate which will be 50 rs per gb and if one consumer consumes more data then he will be charged only 25 rs per gb.
Mukesh Ambani has said that jio target is to have more than 100 million users within march 2017.He adviced/informed all the employees in his companies to use reliance jio. And When he launched jio and mukesh ambani gave his speech,other companies suffered the loss of 13800 crore,their shares were down.Most of the users of Airtel, Bharti, Idea and Vodafone has switch over to reliance because of its attractive offers like No voice call charges(both STD & Local),No roaming charges,No high data charges,No blackout days.
    It have changed the paradigms and even created its moving towards monopoly.This has forced other companies to reduce their price to be in the competitive which will reduce their profit or they will have even loss.

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It is trying to disrupt the market and it is trying to finish the competition by creating monopolyand reduced or no price policy

Post by prashantnavlani on Fri Sep 23, 2016 2:09 pm

manishnaruka wrote:Yes i am agree with this statement because relaince jio offering to customer at cheaper rate intrenet, calls. so this is highly beneficial to customer according to reaserch Jio's pricing plans to trigger an accelerated consolidation in the fragmented voice market, adding that spectrum and balance sheet limitations of GSM new entrants such as RCom, Aircel, Telenor and Tata Teleservices would enable incumbent carriers to benefit from improvements in voice average revenue per user (ARPU) improvements at the lower end of the market.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by shubham jaiswal on Fri Sep 23, 2016 2:12 pm

Yes, Reliance Jio's aggressive pricing will impact and is impacting its other competitors in the telecom sector. Reliance Jio is giving a tough time through its different strategies and prices which is attracting the consumers and making them shift from their existing service providers to Jio. The services provided by Jio like giving 4G free for 3 months and voice calls and roaming free for lifetime is affecting other service providers. Jio would start charging from its customers from 1 January, 2017. These policies are forcing other service providers like Airtel, Vodafone, Idea,etc to revise their prices and lower them to still remain as a competitor in the market. As due to the coming up Jio, people are getting more attracted towards it and switching from their service providers. To sustain in the market the other service providers only have one option at this point of time to revise their policies and prices and retain its customers

In 2010 Mukesh Ambani bought 96% stake in Infotel Broadband which had won 4G spectrum in all sectors in India. Mukesh Ambani, Chairman of Reliance Industries (RIL) announced the launch of Reliance Jio from September 5th 2016 with an aggressive pricing structure. He also said that "Incumbent operators have significant advantages over new entrants, since incumbents have well established networks and existing customers. New entrants require fair access to both.
Later, they named it to “Jio”, and started building fiber optics network around the country. Reliance Jio has the longest fiber optic network in the country, ranging over 2.5 lakh Kilometers of fiber. Reliance has invested Rs 150,000/= corers into this fiber optic network, which is more than two times the combined investment of Airtel, Idea and Vodafone. Everything Jio have done till now is intended at making money. Because once fiber optic is laid down the cost of operating it is not very huge. On the contrary, one can operate network at minimal cost. Therefore, the only focus is to get more internet users.
So, I think the company’s market structured has transformed from PERFECT COMPETITION to OLIGOPOLY COMPETITION. Because the minimalist approach of Vodafone and Idea towards data creates a paradox. Oligopoly is a market structure in which a small number of firms has the large majority of market share. An oligopoly is similar to a monopoly, except that rather than one firm, two or more firms dominate the market. There is no precise upper limit to the number of firms in an oligopoly, but the number must be low enough that the actions of one firm significantly impact and influence the others. And the pricing strategies followed by the company is PENETRATING PRICING as company quickly wanted to establish large market share. In order to attract customer, the company has established various offerings. Since the customers are very responsive to price change the effective penetration requires a very elastic demand for goods to increase the quantity demanded.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by siji abraham 1650 on Fri Sep 23, 2016 3:15 pm

India's telecom sector is characterized by private enterprises,innovation,investments and competitive regime.The entry of Jio will enhance all of these. Whenever there is an entry of new operator there is an upheaval in the market. There are big four pan India operators whp have an ambition to remain pan India data and voice suppliers so there is no reason why they should not be willing to fill the gap.In a bid to defend its data market share, the country's largest telecom company, Bharti Airtel, has come out with prepaid data packs intended to drive higher usage. The packs allow unlimited data at Rs 51/GB, provided the customer makes an upfront commitment of Rs 1,499.
It appears that Airtel is seeking to prevent the upper end of the market from moving to a rival’s network by throwing in more benefits for the same price.
Ever since Reliance Jio announced its free trial offer, data usage of incumbents has been on the wane.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by salonimaheshwari31 on Fri Sep 23, 2016 8:05 pm

Impact of Jio’s aggressive pricing –

Jio is providing unlimited voice call @ minimum recharge of 149 and 4G internet connection starting with Rs 112 per GB on 449 plan reducing to Rs 66 per GB on highest plan of Rs 4999. Hence this is an aggressive pricing which would impact the incumbent operator’s profitability as they would try to match the pricing however impact on sustainability would depend on Incumbent’s market position.
It is important to understand how people respond to pricing and their usage behavior on data. Jio is driving on the assumption that with their low data pricing they would be able to increase the data consumption, hence would be able to generate profits despite providing free voice calls. However a close look to Jio’s pricing shows that it is not substantially low to drive heavy data uses. If someone wants to use lot of data she would use services of local or national broadband service provider such as Hathway, Tikona, BSNL broadband etc as their data plans are much cheaper and provides lot more data also. In India large number of data users exists at two ends – one who uses 1-4 GB of data or other who uses 15 – 50 Gb and Jio’s pricing stands in between these two customer segments. Hence at this pricing of Jio two types of users would shift
Segment one - Users who want to exploit free voice services @149 only
Segment two - users with data needs between 4 to 10 GB.,
segment one users are low revenue users shift of these users from Incumbents to Jio would impact the revenue base of Incumbents but not much impact on profitability whereas switch by “segment two” users would have higher impact on profitability and lower impact on revenue.

Indian telecom market structure is oligopolistic in nature where the participants fight for market share and profits on the basis of prices and differentiated products. Jio’s  pricing would force the existing service providers to come with competitive pricing. Airtel market leader has already initiated the pricing war by introducing innovative data pricing for prepaid users (51 per GB post 1499 recharge for 12 months).

Viability of Jio’s business depends on four factors –
1)      Entry of Jio in segment between 149 and 499 plan, or large number of customers with heavy data uses.

2)      Incumbents fails to match the pricing

3)      Portability and use of Jio number as primary number

4)      How many people shift from their regular phones to VoLTE enabled phones.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by kajol singh on Fri Sep 23, 2016 8:30 pm

YES, Reliance Jio's agressive pricing will impact operators as reliance industries has invested Rs. 1.5 trillion to consume free voice calls and internet data till december 31. After that, its services will become chargeable, that too at rates which will make key players such as Bharti Airtel, Vodafone and Idea Cellular feel the heat. Reliance Jio claims that against a requirement of 4,000 to 5,000 points of interconnect per operator, the interconnections released by Airtel are less than 2,000, about 1,500 by Vodafone and close to 1,600 by Idea. As Reliance Jio's commercial launch approached, incumbent telecom operators Bharti Airtel, Vodafone and Idea cut tariff and bundled free calls with data to drive mass market adoption. The telecom industry as a whole and the government will gain significantly from the entry of Jio.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by prakhar.gupta on Fri Sep 23, 2016 10:07 pm

The telecoms sector is currently reeling under financial stress, high debt burden and slowdown in revenue growth. Further decline in data tariffs may impact operators' profitability and sustainability,"
YES jio will have great impact on others operators like bharti airtel, vodafone &many others operators.Jio has entered in such a way that everyone is astonished it has a huge impact on companies profitability and sustanibility of others operators(airtel,vodafone,idea) as well as it will change the paradigms for the telecom sectors.
I would place telecom companies like Bharti Airtel,IDEA, Vodafone in Monopolistic Competition as:
No. of firms=Many
Elasticity of demand=Highly Elastic
Product Differentiation=High
Reliance is trying to be acquired monopoly market for attracting all buyers with single seller.Experts believe Jio’s tariff offer of unlimited voice calls bundled with multiple data buckets will compel incumbents to cut call charges for retaining mid- to high-end average revenue per user generating customers and securing their voice business. It expects the weaker revenue growth for No.1 Bharti Airtel and third ranked Idea to lead to 7 per cent and 10 per cent cuts in earnings before interest, tax and 10 per cent and 65 percent cut in earnings per share, respectively. As the voice business plateaus, they have turned to pricier data services for growth and ramped up 3G/4G presence. Bharti Airtel and Vodafone India recently offered unlimited voice calls on high-value post-paid packs to retain higher revenue paying customers ahead of Jio’s launch. The two, along with Idea, have also slashed effective data prices by nearly 70 per cent on some plans. However, it’s not only incumbents that will have to deal with uncertainty. The going is unlikely to be easy for Jio and the shareholders of Reliance Industries Ltd (RIL) either. Aggressive pricing means that break-even will get delayed. On the launch day, RIL’s share price also dropped by close to 3%. Clearly, shareholders of existing operators are not the only worried lot. Jio is a huge diversification and its success will be critical for RIL and its shareholders.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by Asif PGFB1653 on Sat Sep 24, 2016 12:44 am

Yes, it will have impact on other existing operators profitability. Reliance Jio's pricing is definitely attacking on competitors. We can see that Reliance is trying to convert the non users into Jio users. It has disrupted the industry by "penetrating pricing" strategy. The aggressive pricing will definitely impact incumbent operators' profitability for certain period of time but having said that it would not make much difference because it is not offering free calls and data till life long. For long run Reliance has to do away with "loss leader pricing" in order to survive in the market.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by alka yadav on Sat Sep 24, 2016 1:59 pm

Yes i m agree that the entry of reliance jio in telecom market will have great impact on other operators as it is providing great offers to its customers due to which the customers from other operator are moving to jio. There is an immediate impact of this on BSNL as it cut its rate but till now airtel is not in mood to cut the rate.These telecom companies are placed under monopolistic as there are many firms and high product differentiation.
The main objective of jio is to capture more customer and increase its market share to become number 1 telecom company by defeating airtel.

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Kar Lo Duniya Mutthi Mein

Post by Deepika Gupta on Sat Sep 24, 2016 2:59 pm

Yes, Reliance Jio's aggressive pricing impact incumbent operators profitability and sustainability as well as it has changed the paradigms for the telecom sector. Mukesh Ambani's Reliance Jio has birthed the convergence paradigm that all voice calls should be treated as data. Everyone knew this was coming. Jio has just moved the start date forward.Today, voice calls based on internet applications on smart phone – Whatsapp, Signal, Skype – are already being done as data. Unlike other telecom companies, Jio does not have any existing voice customers; they lose nothing by offering free voice. In order to get free voice, the consumer will have to subscribe to a Jio data plan. As long as the average revenue per user remains high, Jio has no problem giving away voice free.Most of voice calls today use data links for the backhaul, particularly for long distance. Jio is using this model for all voice calls.
The entry of Reliance Jio has impacted a lot to its competitors like idea,vodafone,bharti airtel.As Reliance Jio's commercial launch approached, incumbent telecom operators Bharti Airtel, Vodafone and Idea cut tariff and bundled free calls with data to drive mass market adoption. Airtel lost Rs 9800 cr & Idea Rs 2450 cr in m-cap during Ambani`s 45 minute Jio presentation. There is an spectre and data war going on between these telecom giants. Jio's tariff offer of unlimited voice calls bundled with multiple data buckets will compel incumbents to cut call charges for retaining mid- to high-end average revenue per user (ARPU) generating customers and securing their voice business.

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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by Rhythm on Sat Sep 24, 2016 3:42 pm

JIO's aggressive pricing upheld the market and on that note AIRTEL has come up with 90 days of free data on 4G which suggests that the market is changing and the leader Airtel has come up as expected, VODAfONE has also got FDI of 47K crore and we all know that there is announcement around the corner from their side on 4G ,so the paradigm of telecom sector is not that much profitable as it was in its initial years. It is long term investment in which JIO invested first and now airtel & vodafone is coming up with.
Sustainability will be for those who will provide not the quantity (free services) but also the quality of service.Yet it is a suspense that will be furled soon.
It could be a market failure if they would not be able to provide quality service to its customers.
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Re: Will Reliance Jio's aggressive pricing impact incumbent operators' (Bharti Airtel, Vodafone and Idea) profitability and sustainability or would it change the paradigms for the telecom sector. Comment.

Post by shubham.khurana on Sat Sep 24, 2016 6:48 pm

Reliance Jio has shaken the market with its penetration pricing policy hence creating a disruption in the market space. But the question is for how long?
According to me what jio is doing is they are providing free services whether it is data or calls to gain the market share rapidly. Instead of paying to the advertising and marketing agencies jio is spending the money in providing free services to its users before its commercial launch in January 2017. Although after the commercial launch jio might see a slight decline in its market share because of no free services post launch but the market share that it has gain in such a short span of time recovers revenue in long run. Due to the disruptive market policy jio's competitors such as airtel, Vodafone and idea will now have to think on revising their tariffs to sustain in the market because telecom industry is a type of oligopoly market in which if player reduces the prices the other players will respond to it and it is better for other players like airtel to respond quickly to prevent jio eating up their significant chunk of their market share, but in case of jio it has given its services free of cost so other players cannot match it to stop jio which is a very good example of blue ocean strategy.

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