Reliance Jio’s 4G LTE launch and low data tariffs have created ripples in the telecom industry and incumbents are likely to both see pain and benefit from the entry of Mukesh Ambani’s telecom venture. Says Fitch Ratings, “Jio’s bundled offerings are very compelling. The tariff is cheaper than anticipated by almost 25-30%.” “We believe that lower tariffs will hurt the margins of existing telcos. We don’t expect existing telcos to retaliate with lower prices,” a Fitch analyst told BTVi. “We expect pain for existing telcos for the next 12 months, but they will also benefit from the high data market created by Jio. At best, I expect existing telcos to match Jio’s tariffs,” he said.
Fitch has a negative outlook for the Indian telecom industry. It believes that the telecom market leader Bharti Airtel will feel the biggest pain from the launch of Jio. “The ratings headroom for Bharti Airtel has been narrowed. There is also very less headroom for Reliance Communications’ rating upgrade, given the huge debt level,” Fitch says.
Mukesh Ambani began the 42nd AGM of Reliance Industries by talking about his plans for the launch of Reliance Jio. Free voice calls, low data usage charges, lucrative schemes for students – Ambani had something for everyone at the launch announcement of Reliance Jio. “Jio means to live and to be alive to very opportunity. World’s demand for digital oxygen, that is data, is growing exponentially. Jio aims to fulfill this need of Indians. Access to information will now know no barriers,” he said.
“It is only appropriate that we the launch of Jio in front of our shareholders. Thank you for your support. It gives me great pleasure to welcome you all. I start with the newest and the youngest member of the Reliance family, Jio…Our Prime Minister Narendra Modi’s vision for Digital India is a life changing moment. Jio is a dedication to that Digital India dream of the Prime Minister, his vision for the 1.2 billion people of India,” Ambani said.