There is method in the Ambani madness
A day after announcing a fresh round of fund raising for its ambitious telecom venture Jio, Reliance Industries Ltd chairman Mukesh Ambani drew out the final contours of his grand strategy to conquer India’s telcom waves.
Speaking at the company’s annual general meeting, the man who’s determined to wrest back the telecom market he lost nearly 14 years ago from incumbents like Bharti Airtel Ltd and Vodafone India Ltd, announced a market killer of a new phone called, not a very imaginatively, the Jio Phone.
Loaded with features, the Jio phone will be available to subscribers against a Rs1,500 one-time security deposit which will be fully refundable after three years. A whole host of other schemes, including one called Sachet that’s taken right out of the play book of shampoo sellers, could see the price of smart phone ownership in the country crashing to unheard of levels. This will further drive the data usage which lies at the heart of Ambani’s game plan for Reliance Jio Infocomm Ltd.
For the existing players, already reeling under the onslaught of Jio’s free voice and low-priced data plans, this could be a real body blow. Own the service and the device and the space is yours, is the traditional wisdom in the services business. And Jio’s taking all the steps in that direction.
With this, the final piece in the Jio jigsaw is in place and it makes for a pretty pattern though not of course for its competitors. Slowly but inexorably, India’s telecom customers will be drawn into this gigantic new world of freebies and affordability. Once the numbers are in place, Reliance Industries, with its superior fund-raising capability, will simply keep upping the ante. Even if the number of existing customers abandoning other telcos to embrace Jio, is still very small, merely by being last man standing in a bloody and bruising no-holds-barred battle, Jio could be the eventual winner. This is not to underestimate Bharti Airtel’s ability to fight back, but even if it becomes a two-player contest, Jio would feel it is already in play.
From there, the sky is the limit and may the best man win.
Sundeep Khanna is a consulting editor at Mint and oversees the newsroom’s corporate coverage. The Corporate Outsider will look at current issues and trends in the corporate sector every week.
Click here to read more from The Corporate Outsider.