Tag: India

Reliance Jio: Learning from India’s problem solver

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Introduction

This year marks the 25th anniversary of mobile networks in India. The huge potential of the market has attracted many players (even as recently as 2016, there were 12 mobile operators in India). But most have had their fingers burned by the complexities of this market, as well as intense competition, particularly following the entry of Reliance Jio in September 2016.

In the past four years, Reliance Jio has gone from strength to strength, becoming the leading telco in terms of mobile subscriber numbers in December 2019, dramatically expanding internet access and driving adoption of digital services across the country. It is not an exaggeration to say that Jio played a major role in the digital transformation of India to date.

Evidence of Jio’s impact on the Indian market

Source: STL Partners

Jio leads Indian telecoms

By delivering broad societal progress and value, Jio has been able to overcome many of the regulatory and political challenges that have hindered other new entrants to the Indian telecoms market. Jio is in good standing as regards its future ambitions in the digital environment, helping it to attract over USD20 billion in investment between April and July 2020 from Facebook, Google and other international investors.

In India, Reliance Jio has trialled elements of a Coordination Age approach, setting out to solve various socio-economic problems by matching supply and demand, while moving up the value chain to unlock further sources of revenue growth.

At the time of Jio’s entry, India was still predominantly a 3G market, with voice calls being the main application. Although there were a multitude of plans on offer and the retail price per minute was among the lowest in the world, mobile communications remained out of reach for many (not helped by high license and spectrum fees that translated into upward pressure on pricing).

Reliance Industries recognised an opportunity to use the advent of 4G technology to build a data-first telecoms player that could support its wider aspirations to develop a globally competitive technology business in India. Accordingly, it obtained a nationwide license to operate a 4G network and encouraged take-up with a promotion that offered customers free voice calls forever.

The existing operators rushed to defend their market positions by dropping their prices resulting in a price war that destroyed value in the market and has led to consolidation and insolvencies such that, aside from Jio, only two privately-owned operators remain – with the real possibility that the market will shrink further and become a duopoly.

STL Partners covered the success of Jio’s disruptive market entry strategy in Telco-Driven Disruption: Will AT&T, Axiata, Reliance Jio and Turkcell succeed? report in 2017. This report considers Jio’s strategy in the context of the Coordination Age. It looks at what this has meant for the market and highlights the implications for operators in other developing markets.

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Table of Contents

  • Executive Summary
  • Introduction
  • Interventionist government shapes market
    • Mobile market overview
    • The shifting sands of policy
  • Jio overtakes the incumbents
  • The rise of Reliance Jio
    • Leveraging the strength of a conglomerate
    • Restructuring and renewal
  • Major emphasis on partnerships
    • Start-ups
    • Global technology partners
  • Competitor positions
    • Bharti Airtel faring better than Vodafone Idea
    • Competitors’ relationship with the government
  • Conclusions
    • Lessons for telcos in developing markets
  • Index

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4G success factors: What’s driving results in APAC?

Introduction: 4G strategies need the right market conditions to take off

Implementing 4G can help operators increase ARPU by reducing churn, offering a platform for new services, and encouraging increased data use. 4G networks also give operators greater control over data traffic management, and can ease pressure on overloaded 3G networks.

However, rates of adoption are not the same in every market. Therefore, for operators to successfully implement 4G and drive high adoption, they need to understand which key factors influence 4G adoption the most, and how they should adapt their strategies accordingly.

The Asia-Pacific (APAC) region encompasses over 30 individual countries and is home to more than half the world’s population. The range of economic, geographic, societal, and technological factors within the region is incredibly diverse: for example, at one end of the scale countries like Japan, Australia and South Korea enjoy high standards of development and technology adoption, and at the other there are countries like Nepal and Bangladesh, which are still developing. The region is also home to China and India, two countries that have undergone incredibly fast economic development over the past few decades, and emerged as important global markets – several other countries in the region are expected to follow suit in the future. Other influential factors such as government technology policies and market dynamics such as competition also vary widely.

For telcos outside this region looking in, some APAC countries will be trailblazers for new technologies like 5G, and other APAC countries will be attractive investment opportunities because of their potential for rapid development. To understand where opportunities lie – both for investment opportunities and for case studies to learn from – telcos need to study the region at an individual market level.

This report is the first of two that focus on the 4G market in APAC. This report uses quantitative and qualitative analysis to identify:

  • Which economic conditions influence 4G adoption the most
  • Where 30 individual countries are in their 4G adoption journey (and, implicitly, their path to 5G)
  • What prospects these countries have for further 4G growth
  • And what strategies operators should use to encourage 4G adoption

Contents:

  • Executive Summary
  • 1. Introduction: 4G strategies need the right market conditions to take off
  • Methodology
  • 2. APAC – a region of challenge and opportunity
  • Why should operators invest in 4G?
  • A potentially huge 4G market
  • 3. Diversity across the region means a “one size fits all” approach won’t work
  • Urbanisation and GNI per capita have the strongest correlation with 4G adoption…
  • Which countries have the most potential?
  • Qualitative factors also influence 4G adoption
  • 4. Quadrant analysis and country profiles
  • Quadrant I – 5G front-runners and 4G champions
  • Quadrant IV – High growth potential, but can it be realised?
  • Quadrant III – Challenging environment, but some exciting opportunities
  • 5. Recommendations and conclusions

Figures:

  • Figure 1: Comparing 4G penetration to adoption environment
  • Figure 2: APAC has the largest population in the world
  • Figure 3: And has more 4G subscribers by volume
  • Figure 4: But APAC has not yet fulfilled its 4G potential
  • Figure 5: APAC could be a 3 billion subscriber market
  • Figure 6: Analysis of 30 individual countries
  • Figure 7: Comparing 4G penetration to adoption environment
  • Figure 8: Quadrant I 4G adoption
  • Figure 9: Quadrant I heatmap scores
  • Figure 10: Quadrant IV 4G adoption
  • Figure 11: Quadrant IV heatmap scores
  • Figure 12: In eight countries 4G adoption is currently low but could take off
  • Figure 13: Quadrant III, Group 1 heatmap scores
  • Figure 14: Nine countries will continue to have slow 4G adoption
  • Figure 15: Quadrant III, Group 2 heatmap scores