The Welcome Offer, Jio Prime, Dhan Dhana Dhan Offers market effect

The following offers had a definitive impact on the telecom industry incumbents like Reliance Communications , Tata Docomo have shut shop or major players merged (Idea and Vodafone) or they saw their bottom lines erode drastically. But all these freebies have been a cost to RIL a fortune. It is difficult to ascertain how much as the quarterly results of RIL encompass the total expenditure of the group (i.e Petroleum, Retail and other verticals). But By Mukesh Ambani’s claim he has made at least $25 bn in Jio. This tremendous investment in Jio would have paid off if Jio now had a market dominant position in number of paid users. At the end of the welcome offer and once the paid operations commenced. Jio’s 100 + million free customers on the welcome offer converted to about 70 million paid customers. This number dwarfs in case of the incumbents. Airtel has 273.65 million subscribers, Vodafone has 209.06 million subscribers, Idea Cellular has 195.37 million subscribers (Reference). Infact recently due to the stiff competition faced by Jio. Tata indicom has been acquired by Airtel at no cost and none of its debt (Tata Indicom has a debt of Rs 30,000 crores) This will migrate another 40 to 50 million paid users to Airtel’s subscriber base by the end of the year. Bringing it to a total of 320 million subscribers. Airtel would have to continue paying the spectrum fees incurred by the Tata Indicom (Reference) Additionally Vodafone and Idea are in the final talks of a merger. The combined entity would be India’s largest telecom provider with over 400 Million subscribers.(Reference). Looking at recent developments Reliance Jio and its size of subscriber base can be compared to players like Telnor or Aircel but not with the big incumbents.