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Company: Reliance Jio Infocomm Limited (RJIL)

Re-Entry of RIL in Telecom sector Telecom has always been a sector close
to the heart of the Mukesh Ambani, who is known for his quick execution of
mega projects, launched his dream mobile services in 2003- 04 with a
slogan Kar Lo Duniya Muththi Mein (take control of the world).
The launch of full-scale commercial services by Reliance Jio Infocomm
Limited (RJIL) has been a long time coming. Reliance Industries had
announced its intentions to enter this space way back in June 2010, when it
purchased Infotel Broadband Services, an unlisted firm, for Rs 48 billion.
Infotel was remarkable in that it possessed broadband spectrum in all 22
Indian circles.
The company was rebranded soon after the acquisition and RJIL has
bought more spectrum since then. The company spent over Rs 1.3 trillion
prior to distributing the first set of SIM cards earlier this year, when telecom
services were soft-launched. The LYF brand of 4G handsets was also
made available at group outlets. The initial users were Reliance group
employees and their family members and select invitees, who started using
RJILs voice and data services a few months ago.
Despite the long lead time, the launch on September 1, 2016 at the annual
general meeting of the flagship company set the proverbial cat among the
pigeons. Promoter Mukesh Ambani made a sensational commitment that
RJIL would offer free voice calls permanently, a generous number of free
SMSs and free national roaming on its network, which uses the voice over
long term evolution (VoLTE) technology.
In addition, RJIL is offering all its services free of cost till December 31,
2016. The company has released 10 indicative tariff plans at different price
points, ranging from the minimalist Rs 19 per day to the top end Rs 4,999
per month. Compared to the terms of the existing plans offered by other
operators, RJILs plans seem generous for they promise more data at every
price point. Moreover, free additional data will be offered between 2 a.m.
and 5 a.m., along with features such as free data downloads from RJIL WiFi hotspots.
The RJIL IP-based network covers 18,000 cities and over 200,000 villages.
RJIL says that the transaction for the transfer of spectrum in the 800 MHz
band from Reliance Communications (RCOM) to RJIL has taken place

across 13 circles and it is sharing spectrum in the 800 MHz band with
RCOM across 21 circles. It also holds spectrum in the 1800 MHz and 2300
MHz bands.
The network would really be put to test once it has large number of users.
RJIL plans to invest more in infrastructure and intends to cover 90 per cent
of the Indian population by March 2017.
Now it is Reliance Jio Infocomm Ltd.(RJIL), wholly owned by RIL for 4800
crore (US$730 million). Infotel Broadband was the only successful bidder
for pan-India fourth-generation (4G) spectrum auction held by Government
of India. Embodying the latest technology, 4G-LTE offers data transmission
at almost four times the speed of 3G and 16 times the speed of 2G. This is
expected to cause problems for 3G players such as Bharti, Vodafone and
Idea, who have paid a huge price to buy the spectrum. The license will
allow the unit, Reliance Jio Infocomm Ltd., to offer telecom services
including voice telephone services under a single permit in all 22 telecom
service areas.
RJio has signed agreements with Anil Ambanis Reliance Communications
(RCom) for using its inter-city fibre optic network. As per the agreement,
RJio would use RComs multiple fiber pairs spread over 1.2 lakh km across
the country for providing backbone to roll out its 4G services.
Reliance JIO Infocomm Ltd. SWOT Analysis
Strengths

Asset leverage allows Reliance JIO Infocomm Ltd. to use their best operational
assets to expand their business and improve their market.

Size Advantages (Reliance JIO Infocomm Ltd.) Size advantages lower Reliance
JIO Infocomm Ltd.s risks.

Brand Name (Reliance JIO Infocomm Ltd.) A strong brand name is a major
strength of Reliance JIO Infocomm Ltd.

Cost Advantages (Reliance JIO Infocomm Ltd.) Lower costs lead to higher profits
for Reliance JIO Infocomm Ltd..

Technology (Reliance JIO Infocomm Ltd.) Superior technology allows Reliance


JIO Infocomm Ltd. to better meet the needs of their customers

Innovative Culture (Reliance JIO Infocomm Ltd.) An innovative culture helps


Reliance JIO Infocomm Ltd. to produce unique products and services

Real Estate (Reliance JIO Infocomm Ltd.) Having the right real estate is essential
to Reliance JIO Infocomm Ltd.. Location matters,

Pricing Power (Reliance JIO Infocomm Ltd.) Customers typically rebel against
price increases by switching to competing products,

Strong Management (Reliance JIO Infocomm Ltd.) can help Reliance JIO
Infocomm Ltd. reach its potential by utilizing strengths

Financial Leverage (Reliance JIO Infocomm Ltd.)

Weaknesses

Delay in launching

Customer Base Not available as Commercial services yet to be launched


(Reliance JIO Infocomm Ltd.)

Highly dependent upon data consumption

Opportunity

Large scale availability of smart phones: In last 2 decades the number of people
using Smartphone has increased manifolds.

Increasing rate of data consumption: Lower data tariff may further increase data
consumption and thus contribute more to the revenue of company.

International market:-There is huge opportunity in many developing countries

Threat

Saturated market:- The initial phase of rapid increase in subscriber is now over. A
new entrant like Jio needs a large customer base to cross breakeven point.

Highly competitive market:- After the entry of big players like Airtel, Vodafone,
Idea etc the market has become highly competitive.

Changing Government Policy: The changing government policy like cancelling of


2G licences ,imposition of tax with retrospective effect(on Vodafone), refund for
call drop etc, has created uncertainty in the market causing adverse impact on
the investment sentiment.

Rapid upgradation in Technology: From 2G to 3G and 3G to 4G changes have


occurred in very short span of time. Even next generation 5G is approaching
shortly. Each upgradation requires huge investment and it is not possible to
remain in market without it.

Partnerships can turn sour

PEST:
Political Factor:
Government stability
Permission of FDI
Unified Access Licensing Scheme
New Telecom Policy (call drop)
Tax Policy,
Regulation/De- Regulation,
Tariff,
Competition Regulation
Economic Factor
Growth rates,

Growth of Service Industry,


Favorable investment climate
Demand-Supply Gap
Earning Sensitivity: 16% of the villages are still unconnected through
communication links, which promises a huge market potential for the
high growth telecom market
Inflation rate,
Unemployment,
Labour rate,
Slow growth of market,
Social Factor
demographic
Transforming lifestyles: Due to demopolisation and privatization,
there is transformation in the lifestyle of the people, which is moving
westwards, as a result there is an increasing demand for a developed
urban communication system, especially personal communication
systems like mobile phone.
Changing Demographic Combination: There is an increase in middle
age group (30-40) in the population, which is decision-making
population.
Information revolution: The IT and media boom is delivering
information to the consumers at their doorsteps, due to which the

consumers are adequately enlightened as regards the products and


the competition.
Cultural Values: India is being basically perceived as a country bound
by family values.
psychographic profile of the customers

Technology Factor
R & D activity,
Automation,
adoption of new technology for hard / soft processes within business
Variables like rate of change of technology and operational
feasibilities
Return on Investments (ROI) concerns: The ROI on technology
investments is a matter of concern for the telecom players because
the technology innovations in any form have a very short life.
STP of Reliance Jio
Segmentation
Reliance Jio are present in the market who share similar views regarding
particular brands. Company must decide on the segment it will focus its
activities which is based on five factors namely segment size, segment
profitability, segment growth, current and potential competitors and the
capabilities present in the market. Jio seems to have made most of this
strategy since the 4G network along with data services in India has great
potential for growth and profit. It is in its budding phase and therefore there

are chances of making most of it. Besides, the use of Smartphones in the
Indian market has shown a tremendous increase and still continuous so,
which promises great benefits in this sector. Indias 4G market is set for
exponential growth. Smartphone market volumes are projected to be at 326
million by the end of 2016, according to a Gartner and KPMG report (cited
in Panday 2016) besides, few competitors makes this move of Jio even
more strategic.

Targeting
Once, the segment of customers on which focus is to be laid is found, the
next step is how to make that segment buy products and Services or invest
in your brand. Once a target market has been determined, Reliance Jio
marketing efforts will remain focused on a particular group of people (who
wish to use more data), ultimately improving campaigns success Jio used
a great tactic to target its selected segment .

From June to July it offers unlimited high speed internet on 4G network and
4500 minutes for free for three months to those customers who buy LYF
Smart phones with come with a sim card. As in India, there has been

problem with online downloads or other internet related functions due to


low speed internet, therefore this tactic has vast opportunities in this
market. However, Jio has set a limit to the number of customers who will be
able to be able to benefit from this offer in the trial period and plans to
provide 4G internet access and services, after the trial period ends, to
those customers who will buy these Smartphones during trial months. This
way it aims at gaining prospective customers.
Positioning
Once market segment to focus on is selected and the tools or techniques to
target this segment have been devised and implemented, the next part is
positioning in the market. Positioning simply means Reliance Jio brand is
perceived by the customers. states that positioning can be evaluated via
perceptual maps which are graphical depictions of where brands are and
where competitors are in the minds of the customer. Jio positioned its
Smartphones based on price and sales. And the offering of free voice calls
minutes and high speed internet, made its identity different from its
competitors and thus it gained more popularity. According to the Hindu
newspaper, it has already served 500,000 customers already has become
third most selling Smartphone in India.
Porters 5 forces analysis of Reliance JIO Infocomm Ltd

Threat of new entrants: New entrants are potential competitors. New entrants
are a weak force in the industry. The lesser the entry barriers, easier it is for new
companies to enter the industry and hence, greater the competition in the
industry. New entrants will often attempt to break into the industry with low prices,
innovative products, or new features and benefits. When the barriers are strong,
the threat of new entrants is low. Pricing and technology is important factor for
new entrants. Other service providers like Airtel, Vodafone, Idea, Tata watching
closely regarding plans and tariff offered by Reliance Jio. Airtel have also started
similar plan similar to Reliance Jio.

Availability of Substitutes: A substitute product is a product similar to the


relevant product but is not identical to it. Substitute products are a very weak

force in the industry. Substitute products restrict industry profitability by limiting


the selling price companies in the industry can charge. In the Telecom industry,
this is determined by availability of very close substitutes and low customer
loyalty. Other service providers like Airtel, Vodafone, Idea, Tata

Bargaining power of the buyers: Buyers/customers are a moderate force in the


industry. By virtue of the market becoming customer centric, the buyers have
bargaining capacity and may demand better product features for the same price.
Their behavior and power is dependent on the availability of alternatives, market
awareness, and preferences and so on.

Bargaining power of Suppliers: Suppliers are again a moderate force in the


industry. But if the supplier is a monopoly, then his powers know no bound. This
is dependent on the level of switching cost and the terms and conditions laid
down by the suppliers.

Rivalry between Firms: Rivalry among competitors in the industry is powerful.


Competitors may adopt under cutting and bring down the industry. Hence the
rivalry between firms affects the industry to a major extent. This factor is
dependent on price wars, corporate on price wars, corporate image, adoption of
new technology, value added services, and so on.

Reliance Jio Marketing Strategy:


Jio Aim at creating an entire digital ecosystems, offering broadband service, application
smart devices and mobile technology facilities, its offering a wide library of recorded and
live music programme, television shows, sports programme, jio money, jio play and jio
join app the most popular application.
Jio Customer Acquisition Plan:
Jio has appointed 50 customer acquisition and relationship manager who are hiring
teams that will target to sign up 1 million users each in the first two month.

Phase II
Strategy of Reliance Jio
The Sim slots of nearly 25 million cellphones have been acquired by Reliance Jio even
before its commercial launch! Reliance Jio is making headlines with its easy on pocket
data packs and lifetime free calling. Never in the history of telecom has anybody
witnessed a player seize the market in a weeks time by distributing Sim cards laden
with unlimited free internet.
1) Quality Subscribers: Analysts doubt the strategy of Reliance by citing that that
with its schemes Jio will attract low quality, treacherous customers who will jump
to other networks once the freebies end. But Reliance doesnt believe so. It is
offering free 4G data which means itll occupy the primary sim slot in the smart
phones 4G phones. Also customers will switch to Jio from their broadband or the
Wi-Fi services and possibly will stick to it even after the promotion period ends. In
addition to that it is offering free calling, so it is aware people will be using the
number for calling purposes for the next three months. Three months is a
sufficient time span for people to experience the super-fast speed and the quality
services and permanently transfer to the network. Now assume that Jio reaches
75% of its planned subscriber base of 100 million. So by the end of the year,
Reliance ends up with 75 million subscriber base. Indias total 4G user number is
believed to touch the mark of 143 million by this year end. So within 3 months of
its official launch, Jio would have acquired more than 50% of the market share.
Even if many subscribers leave the association with Reliance, still Reliance
would be left with significant market share.
2) 100 million mark: Mr. Ambani has expressed his ambitious plans of to reach
90% of Indias population. The company plans to acquire 100 million subscribers

in the first year of its launch. By luring the population with free data and calls for
the initial few months, many doubt if this could result in financial gains for the
company. But by doing this it is stretching its operational and strategic bandwidth.
Reliance Jiyo has pumped total 1.5 lakh crore for 4G. Reliance Jios 4G network
will cover 18000 cities and town and over 2 lakh villagers. Now assume 50% of
the users opting for 149 Rs plan and the remaining for higher price plans,
Reliance can easily make 400 Rs per customer. If Jio manages to acquire a
subscriber base of 100 million customers, itll recover the cost within 5 years and
start reaping huge profits after that (only if the existing technology doesnt
obsolete!) Mukesh Ambani is betting on one single thing: User base.

3) Oligopolistic market: The market for service providers is oligopolistic where the
participants fight for market share and profits on the basis of prices and
differentiated products. Reliance jio has both. It has differentiated its product by
setting up a huge bandwidth to handle the traffic of enormous data. And the plans
they are offering is at amazingly cheap rate. Masses are overwhelmed by the
announcement of unlimited free calling. Jio has an IP network hence all the calls
will be routed through internet just like whatsapp calls and skype calls. And once
the huge optical fibre network infrastructure is built, there isnt any marginal cost
for the company for providing call service. In an oligopolistic market if some
player creates such kind of ripple it forces other players to slash the prices. The
strategy of other players in the market is solely dependent on Relaince Jiyo. Well
played Jio!
Reliance Jio analys and responded to its markets. (Market Segmentation):
At the Reliance Annual General Meeting this morning, Mukesh Ambani,
Chairman and Managing Director of Reliance, officially announced the launch of
Reliance Jio. It is meant to be a premium data service available to people at low
costs. While all the flamboyant and customer-delighting offers are breaking the
internet, let us take a look at the lesser known things about Reliance Jio:
Company focus to start with lowest Global Solution, along with lowest 4d device
(smart phone). Company provide free Aaps worth Rs 15,000.00. Registration
without any documentation only Adhar card required to get connection. Company
focus to provide additional discount for student is good idea to hold wide range of
customer. Company focus on enterprise friendly solutions and Plans.

Best 4G network with lowest data rate globally,


LYF devices starting Rs. 2,999
Complimentary Jio Apps worth Rs. 15,000
Instant eKYC Aadhaar card based activation
Nationwide free voice calls to any network. No roaming

No complex telecom charges


Jio simple 4G Tariff Plans
Extra discount for students
Enterprise friendly solutions and plans
India's first ever platinum 4G service

Resources, Capabilities and Core Competencies:


Resources:

Reliance Jio look to partner with digital entrepreneurs: Reliance Jio

is going to clear the way for young companies and


entrepreneurs to take advantage of the platform they are
building. This will not only accelerate their growth, but will
also give them opportunities to form strategic
partnerships.

Reliance Jio was called IBSL: Soon after the broadband wireless
auction (BWA), in June 2010, RIL bought a 96% stake in Infotel
Broadband, which had won 22 circles in the BWA. Although they were
unlisted, they were worth over Rs 4,800cr, and were the only company to
gain broadband spectrum in all 22 zones of India.

Jio was supposed to be launched in 2015: RIL initially planned on


launching their Jio services towards the latter half of 2015, but could only
reach a beta launch, which was kickstarted by Shah Rukh Khan on the
December 27, 2015 in Navi Mumbai. The employees of Jio and their
families were made to use the services for testing purposes, and it is
now open to the masses after many reforms and changes.

LTE enabled smartphones are on their way


We all know that RIL is going to use (Long Term Evolution) LTE
technology, but not all phones are going to be able to support it. RIL joined
hands with Intex in June 2015 for the supply of 4G-enabled handsets with
the Voice Over LTE (VoLTE) feature for better use of Jio services. January
2016 also witnessed the launch of RILs own line of smartphones under
the brand name of LYF. So far, we have seen models like Water 1, Water
2, Earth 1 and Flame

Value Chain Analysis of Reliance Jio

The product or service portfolio is Reliance Jio responsible

Market growth rate: the rate of growth in the market (geographical area) in which a
particular product is competing. Reliance Jia offer products and services with big market
Growth rate approx. 1 million customer in one moth.
Relative market share: takes a products market share and divides it by the share of its
biggest competitor.
BCG Matrix places products in a box divided into 4 quadrants, with the y-axis
representing the market growth rate, and the x-axis representing the relative market
share. The model defines each quadrant or category as follows, going clockwise and
starting in the upper left quadrant:
Stars (upper left quadrant) products with high growth and high market share.
Question marks (upper right quadrant) products in high growth markets, but low
market share.
Dogs (lower right quadrant) products with low growth and low market share.
Cash cows (lower left quadrant) products with low growth, but high market share.

Reliance Jio grown through Diversification:


Live TV (Jio Play,
Video on Demand (Jio World),

Cloud base Sync and Storage (Jio Drive),


Video Caas over 4 G and Live Video,
Health Support Apps

Handsets for 4G Services


Lyf Flame.
Lyf Water,
Lyf Wind

The Porter diamond:


Factor conditions are human resource and physical resources (Reliance have
ability to manage Human Resources), knowledge resources (Reliance Jio have
ability to utilize resources from market), capital resources (World leading
organization so capital is not a problem any time) and infrastructure (World biggest
Infrastructure). Specialized resources are often specific for an industry and
important for its competitiveness. Specific resources can be created to compensate
for factor disadvantages.
Reliance Jio's business model is really simple - most of you are going to pay the
same or probably more money to Jio compared to your current network provider.
After reading this answer, you will realize what a clever businessman Mukesh
Ambani is.
Demand conditions in the home market for 4G can help companies create a
competitive advantage, when sophisticated home market buyers pressure firms to
innovate faster and to create more advanced products than those of competitors.
Related and supporting industries can produce inputs that are important for
innovation and internationalization. These industries provide cost-effective inputs,
but they also participate in the upgrading process, thus stimulating other companies
in the chain to innovate.
Firm strategy, structure and rivalry constitute the fourth determinant of
competitiveness. The way in which companies are created, set goals and are
managed is important for success. But the presence of intense rivalry in the home
base is also important; it creates pressure to innovate in order to upgrade
competitiveness.

Reliance Industries financial situation using well established


ratios of outcome and resource utilization.

Cash Flow Ratios

Operating Cash Flow Growth %


YOY
Free Cash Flow Growth % YOY

2007-

2008-

2009-

2010-

2011-

2012-

2013-

2014-

2015-

2016-

03

03

03

03

03

03

03

03

03

03

63.04

-3.08

0.33 25.83 62.67 -26.56 50.79 17.18 -20.54 15.82

-23.57

TTM

Cap Ex as a % of Sales

24.59 19.50 18.42 11.43 12.74

4.57

7.74 13.83 16.88 17.9618.21

Free Cash Flow/Sales %

-9.87

-7.66

-7.65

-1.37

-0.20

2.26

1.56

-3.87

-7.72

-3.56 -3.61

Free Cash Flow/Net Income

-0.93

-0.54

-0.77

-0.11

-0.03

0.41

0.30

-0.75

-1.23

-0.36 -0.37

The Company has reserved issuance of 12,67,18,207 (Previous year


13,05,05,114) Equity Shares of ` 10 each for offering to Eligible Employees of the
Company and its subsidiaries under Employees Stock Option Scheme (ESOS).
During the year the Company has granted 45,419 options which includes 21,367
options at a price ` 936 per option, 13,052 options at a price of ` 961 per option
and 11,000 options at a price of ` 843 per option plus all applicable taxes, as may
be levied in this regard on the Company (Previous year 71, 866 options which
includes 60,866 options at a price of ` 860 per option and 11,000 options at a
price of ` 880 per option plus all applicable taxes, as may be levied in this regard
on the Company) to the Eligible Employees. The options would vest over a
maximum period of 7 years or such other period as may be decided by the
Human Resources, Nomination and Remuneration Committee from the date of
grant based on specified criteria.
DETAILS OF LOANS GIVEN, INVESTMENTS MADE AND GUARANTEE GIVEN
COVERED U/S 186 (4) OF THE COMPANIES ACT, 2013
Loans given and Investments made are given under the respective heads.
Corporate Guarantees given by the Company in respect of loans as at 31st
March, 2015 (` in crore)
Sr. No. Name of the Company As at 31st March, 2015
1. Reliance Global Business B.V.

1,539

2. Reliance Holding USA, Inc.

18,750

3.Reliance Jio Infocomm Limited

16,813

4. RIL USA, Inc.

547 674

5. Reliance Industries (Middle East) DMCC

69 66

Phase Three:
Future of Reliance Jio
Reliance Jio effect: Grim future for small telcos like Aircel, Telenor India
Reliance Jio's entry with disruptive offers of free voice calls, roaming and possibly the
world's cheapest data plans will push smaller mobile service providers such as Aircel,
Telenor India, Tata Teleservices and Reliance Communications to the fringes, if not to
exit
altogether,
analysts
say
Deutsche Bank said weaker players with constrained financials will not be able to
replicate Jio's aggressive offers, and hence would eventually cede revenue-share to the
new 4G entrant. It expects the telecom arm of Reliance Industries to corner 10%
revenue share of the mobile market in five years.
Fitch Ratings today said Reliance IndustriesBSE -1.92 %' arm Jio faces stiff competition
from financially strong incumbent telecom players like AirtelBSE -0.89 % and future
capex will depend on growth of its customer base.
Fitch re-affirmed 'BBB-minus' rating on RIL with stable outlook on strength of its robust
refinery and petrochemical business and expects benefits from its investments in the
core business to start accruing from 2017-18.
With almost Rs 1.6 lakh crore already invested in the telecom venture, future capex "will
depend on the growth of its customer base".
The robust operating cash flows from its refining and petrochemical businesses and
relaxed investment requirements in these businesses will provide some cushion against
any weak cash generation from the telecom operations for some time
The rating agency, however, expected RIL to be able to take advantage of the strong
growth potential in the Indian telecom market as it has invested significantly in
infrastructure that would cover 90 per cent of the population by 2017-18 end.
"Jio will face intense competition from the financially strong incumbent Indian telecom
players, but we believe falling data tariffs will support significant expansion of overall

data consumption in India over the medium term," it said, adding that the robust
infrastructure along with its affordable 4G data offerings will support Jio's growth.
Analysts said Vodafone would also face similar pressures, although they didnt have estimates
since the company is unlisted in India. Market leader Airtel, No. 2 Vodafone India.