MIGHT OF AMBANI - COMPETITORS MAY NOT 'JIO'

By Ruma Dubey

Oh there was such a huge build up today about the great Mukesh Ambani speech! Speculation was rife that for Mukesh Ambani himself to speak, first time outside the AGM, would surely mean some big announcement. All knew it had to be about Jio but what no one knew but inferred it would be “big” news. Announcement of Reliance’s Direct-to-Home service is what most felt Mukesh would be taking center stage for. This speculation was so rife that existing DTH player stocks like Dish TV, DEN, Hathway; all were in the red till his speech got over.

And what a damp squib the speech was, at least in the context of the speculation built up. All it turned out to be was a lot of gratifying statistical data about how quickly Jio has grown into this huge telecom company, its e-KYC success and the extension of its promotional offer till 31st March 2017. The entire speech was more about Jio’s superlative run since September 2016 till date.

So a quick synopsis of what Mukesh Ambani took center stage for:

• New Jio users from Dec 4 will get data, voice, video free till March 31 and those enrolled earlier will get also get the benefit till end of FY17.
• A remarkable feat - Reliance Jio crosses 50 million subscriber mark in 83 days
• Jio New Year Offer will give users a maximum of 1 GB data free every day
• All domestic voice call to be free
• Users can get a Jio sim activated and home delivered in just 5 mins through eKYC
• Call block rate has come down from over 90% to nearly 20% as of yesterday
• Launches the Jio Money merchants solution app to enable digital transactions of all types, be it at mandis, small shops, bus tickets, etc – to begin on 5th December.
• Jio is the fastest technology in the world - grown faster than Whatsapp, Facebook and Skype
• Congratulated Prime Minister Narendra Modi for the 'bold' and 'historic' decision to demonetize old currency.
• Target -  doubling Jio network to 4 lakh digitally-enabled outlets before end of FY17

What this means is that for Reliance Industries, the earnings to start from Jio will take another year, we are now looking at FY18 and in FY17, everything is a freebie. There is currently no notion about how Jio would pay off the Rs,70,000 crore in the immediate future. There was absolutely no word on the earning potentials.

Today’s speech might have little for the shareholders; it is seen more as a message loud and clear to its competitors that the lion is on the prowl and Jio will be the King of the jungle – that’s the law of the land. Surely the way in which Jio is moving, right from Airtel to Idea, all would need to rework their strategies for the future; mere monetization of tower assets will not suffice. The way Jio is growing or aiming to grow, it could eat away everything from the existing telecom players too.

Credit Suisse, way back in 2015 itself had put out a report on Bharti, downgrading the stock to ‘underperform’ from ‘neutral’. Credit Suisse had stated that competition from Reliance’s Jio, given the large spectrum holding and ongoing large-scale investments, could pose some serious competition for Bharti. RJio, at the time of launch itself can add 60-80% of Bharti’s current capacity. How true and ominous those words must be ringing for not just Bharti but Idea and Vodafone too.

The Indian telecom sector is at the cusp of major change. We are evolving from voice to data and the future will be convergence, which is what Rjio is attempting to take us. There is no doubt that Rjio will shake up the sector and currently things looks “out of network area” for Bharti, Idea and Vodafone.