This past week, Reliance Jio announced its plans to pump additional Rs 30,000 crore to uplift the not-so-well network coverage. But, the company now has bigger plans and wishes to further pressurize its competitors. In order to achieve the same, Jio now plans to introduce new plans for voice, SMS and data services at a nominal rate until June this year, reports ET.
The freshly designed offer will cost about Rs.100 for data with free voice calls and SMS. The latest offer will commence the revenue for the telecom giant who has been in a race of accumulating users until date. Due to comprehensive tactics used by Jio, other carriers were forced to slash their prices and hence introduce various new schemes. These telecom companies including Bharti Airtel, Idea Cellular, Vodafone India are further engaged in devising similar plans for their loyal customers to beat the competition.
Reliance Jio was launched only in September and has been adopted by people only as an add-on to existing telecom services. Moreover, one of the major reasons behind its massive user base of 72.4 million was the free services offer and with a nominal rate to be charged in future, it may lead to its impending downfall. Chris Lane, a senior analyst at US brokerage, Bernstein clarified the same point and stated,
We expect many will go back to using their primary number if the (free) offer is withdrawn, and Jio could well lose over half its subscribers if it starts charging more without fixing the call drop problem.
According to surveys, Jio’s user-base may touch the 100 million mark by March but will certainly not last long after the income generation process begins. The company will also be required to work on its infrastructure to meet the customer requirements who crawled towards the operator in the greed of free services. The telecom giant invested an initial sum of Rs 1.71 lakh crores to begin its operations. And now with the recently announced 30k crore investment, the total investments into Jio will near to Rs. 2 lakh crore and hence increasing the pressure on other telecom giants.
The telecom giant had invested an initial sum of Rs 1.71 lakh crores to begin its operations. And now with the recently announced 30k crore investment, the total investments into Jio stand at around Rs. 2 lakh crore. Hence, further increasing the pressure on other telecom giants. A senior analyst commented on the going telecom strife as,
But it (Jio) has to come up with cheaper tariff because other incumbents have already launched reduced packs. This price war is a burden on the company (telcos) and the government loses on licence fee as well.