RJio’s 4G launch likely to start a new price war in telecom
Mukesh Ambani-led Reliance Jio Infotel from Friday will start selling for the masses its low-cost smartphones under the brand name ‘Lyf’ with SIM cards enabled for its fourth-generation (4G) wireless high-speed internet services.business Updated: Jun 03, 2016 17:17 IST
Mukesh Ambani-led Reliance Jio Infotel from Friday will start selling for the masses its low-cost smartphones under the brand name ‘Lyf’ with SIM cards enabled for its fourth-generation (4G) wireless high-speed internet services.
The move is a soft launch before Jio goes pan-India at the end of this year with its high-speed internet services as it plans to connect millions to the internet. The Lyf phones will be available in all the large cities in the country, including New Delhi, Mumbai, Chennai and Bengaluru.
Reliance Jio is a fully-owned subsidiary of Reliance Industries Ltd (RIL), which has a market capitalisation of $46 billion, more than the gross domestic product (GDP) of Trinidad and Tobago, and equal to that of the state of Punjab.
The formal launch of the services is expected to start a price war between the telecom operators for the third time. In 2002 monsoon, Reliance Communications, part of the erstwhile Reliance Group (when brothers Mukesh and Anil had not split their father Dhirubhai Ambani’s empire), had started Monsoon Hungama, and were selling handsets for Rs 500. That’s when mobile phones became a commodity from an object of the affluent.
The second time was when Tata DoCoMo in June 2009 launched tariff on per-second basis. The price war this time led to fall in revenue and profits of all the major telecom operators. It resulted in 37% erosion of the telecom industry’s market capitalisation in just six months.
However, this time around there is a lot more at stake – the internet penetration in the country is less than 30%. But, India is the second-largest internet user market with 277 million users after China. The country is thus a land of promise for all the internet-borne companies such as Google, Facebook and Amazon, which are betting big on India.
Jio has already indicated a price war. It will offer users free unlimited broadband service for the first three months, and 4,500 minutes of free voice calls in Lyf smarphones.
The company on Friday has commercially launched the services for the masses six years after RIL bought 95% of Delhi-based businessman Mahendar Nahata’s Infotel Broadband for Rs 4,800 crore.
Meanwhile, Jio has moved away from its earlier referral-oriented plan where it suggested that every RIL employee would refer to 10 people as potential buyers.
RIL is setting up a large distribution network to sell Jio’s SIMs, services and Lyf phones. For now, the company will sell the phones through Reliance Retail stores and some of the other large format retail chains.