Friday, May 15, 2015

Can Reliance Jio Disrupt Indian Mobile Market?

Assuming failure is not an option, after an investment of about US$13 billion, what share of the Indian mobile market can Reliance Jio achieve, over perhaps a decade?

Bernstein Research has estimated Reliance Jio could gain about 10 percent share of subscribers, and three percent of revenue, over a decade. And it is possible Reliance Jio could emerge as the third-biggest Indian mobile service provider, Bernstein Research says.

Citing the experience of Hutchison Whampoa “3” entry into mobile markets in Australia, Austria, Ireland, Italy, and the UK with a similar 3G/data based strategy, Bernstein said Reliance Jio would aim to  disrupt the status quo by offering more voice and data at the same price as competitors.

As you would expect, that is going to ignite a marketing war, as competitors move to protect their existing market share by matching offers.

“We expect both Bharti and Vodafone to accelerate their data propositions in response,  deploying more 4G and matching Jio’s data pricing model while playing up their superior voice coverage and quality,” Bernstein analysts argue. “In the long-run consolidation should result in a better market structure for the remaining scale players: Bharti, Vodafone and Jio.”

“We are less optimistic regarding Idea Cellular’s ability to adapt and compete in this environment and advise investors to reduce their holdings,” Bernstein Research said.

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