Mukesh Ambani’s Jio triple play deserves to upend this cozy club
India’s telecom industry is in turmoil, and depending on whom you ask, one man deserves all the credit or all the blame.
It’s been 18 months since Mukesh Ambani, India’s richest man, entered with Reliance Jio Infocomm Ltd. The 4G wireless network is basically a $31 billion bet on data. Ambani made voice calls — the core offering until then of a dozen mobile operators — absolutely free.
Such audacity both stunned and stung his rivals. Since Jio’s September 2016 launch, smaller incumbents have sold out, closed down or filed for bankruptcy, while the ruling troika of Bharti Airtel Ltd., Vodafone Plc’s India unit and aluminum billionaire Kumar Mangalam Birla’s Idea Cellular Ltd. are hemorrhaging. Vodafone and Idea are also merging. The industry is complaining bitterly about how the regulator is favoring Jio over everyone else.
Rajan Matthews, who heads the Cellular Operators Association of India, is wondering who will put up the $10 billion needed annually over the next five to six years to expand 4G and roll out 5G. Banks are so worried about deteriorating credit quality that they would rather recover what they’ve already lent than throw more money into a bottomless pit.
The one party not complaining is the consumer.
Take a simple regulatory change like the recently imposed ban on nontransparent, discriminatory price discounts that are quietly offered to select customers. The industry is livid. Vodafone has gotten a stay order from the Madras High Court against the stipulation that operators must publish all tariff plans and promotional offers on their websites, the Economic Times reported over the weekend.
It’s not a trifling matter, as a senior telecom executive told me in Mumbai, describing the situation as “grim.” Retaining only those customers they consider to be a flight risk already has a cost. If that now has to be borne across the entire subscriber base in a country of 1.2 billion cellular users, then companies will have no choice except to let the fence sitters go — into Ambani’s outstretched arms. While this may upset Bharti, Vodafone and Idea, getting the same deal for the same service is hardly unfair from a customer’s perspective. This should have been fought for a long time ago.
