CASESTUDY:-

INDIAN TELECOM WAR: STARTUP RELIANCE TAKES ON

LEADER AIRTEL IN 4G SERVICES

Bharti Airtel Limited being in the forefront in offering 2G and 3G telecom services in India and by
enhancing its market share across the country, became the largest mobile phone operator in India by 2009-
10. However, with intensifying competition and the resulting decline in Average Revenue Per User (ARPU),
the company was looking for opportunities to further consolidate its leadership position. In 2010, Airtel won
spectrum for Broadband Wireless Access (BWA) through an auction for four telecom circles, but it could
not win in two important circles of Mumbai and Delhi. In 2012, it bought a 49% stake in Wireless Business
Services Pvt. Ltd. to gain access to wireless broadband spectrum in the two crucial circles in Delhi and
Mumbai.

Reliance Industries Limited (RIL), the largest private company in

India, had forayed into the Indian telecom industry in 2010. In the division of family businesses in 2005, RIL
signed a non-compete agreement with ADAG. As per the pact, RIL could not enter telecommunications. The
two parties scraped the agreement in 2010, paving way for RIL to enter into the telecommunications
industry. RIL bought a 95% stake in Infotel Broadband Services (Infotel), which won spectrum in all the
circles. RIL renamed Infotel as Reliance Jiolnfocomm in January 2013 and in July started work on rolling
out 4G services telecom services in eight states of Northeast India by April 2014.

Subsequent to its acquisitions, Airtel became the first company to

launch 4G services in India in late 2012 and early 2013. RIL's Reliance Jiolnfocomm followed hard on the
heels of Airtel spicing up the competition between two giants.
ANALYSIS OF THE CASE STUDY :-

1. SITUATION ANALYSIS:-

The troubles in the telecom industry seem monumental and they have not even considered other factors like
the 2G scam that took place. The worst, however, was yet to come for the telcos. In 2016, a new player Jio
entered the industry. The predatory pricing strategy followed by Jio offered consumers 4G data for free. This
further put tremendous stress on the telecom industry.
When Reliance Jio entered the markets in 2016 there
were up to 7 telcos who had a substantial footing in the industry. By the end of 2019, there were only 3 other
companies competing. Out of the three only Jio was profitable by extremely slim margins and airtel running
but on losses. Vodafone and Idea too in losses were barely surviving the pricing onslaught. 

Prior to the Jio’s entrance, the telcos enjoyed a  

period where they charged consumers exorbitantly. This was the main reason why Jio already had their stage
set in 2016. Their offer of charge-free services to customers enabled them to immediately gobble up a
section of the market share.
Airtel remains the only major player other than Jio which able to survive,
compete, and raise capital with ease at this stage. It recently announced a 2.75% stake sale to raise 7500
crores ($1billion). In January, 2021 Airtel raised $15000 crores through qualified institutional placement and
foreign currency convertible bonds for 7,500 crores ($1billion).

2. STATEMENT OF THE PROBLEM (OR) FORMULATION OF THE PROBLEM :-

At the time of 2012 there were nearly 7 Telecom operators were there , but when the jio entered into this
telecom industry in 2016 by seeing the offers provided by jio, all customers chosen jio then. All telecom
operators except Airtel and VI went to Bankrupt. And then Jio had over-crossed the Airtel Customers, where
now Jio is at the NO.1 position of Telecom Industry whereas Airtel is giving now an good competition to jio
and VI is still struggling to survive in the Telecom Industry .

3. LIST OF CRITICAL FACTORS (OR) FACTS :-

 5G
 NFV/SDN
 Growing Mobile Ecosystem
 Artificial Intelligence and Machine Learning
  Value-added managed services.

4 . SWOT ANALYSIS
STRENGTH:-
 Arm of a large, well-funded, well-connected
and ambitious Indian conglomerate.
 Economies of scale from large subscriber
base.
 Expertise in a business model that allows it
to maintain high profitability from lower-
yielding subscribers.
WEAKNESS:-
 Cost structure disadvantage with subscribers
spread across two different mobile
networks.
 Low ARPU compared with competitors.
 Weakness in rural market.
 Brand positioning.
 Limited availability of value added services.

OPPORTUNITIES:- THREATS:-
 Aggressive move into the rural market.  Quicker than expected slowing of growth in
 Use upcoming mobile number portability as the Indian Market place.
“Launching pad” to grab the market share  Mobile number portability risks accelerating
of higher ARPU users and ramp up focus on churn of CDMA to GSM
overseas data revenue investments.  New competetors
 Lease spare capacity on its CDMA network  Implication of company being profiled.
to Mobile virtual network operators.  Company overview.
 Methodology.

5. SOLUTIONS FOR THE QUESTIONS IN THE CASE STUDY ;-

Q.1:- Discuss the relevant strategies to be followed by the leader, Airtel and the challenger, RIL.
Marketing Strategy of JIO:-
The business strategy of Reliance Jio is one of the biggest reasons for its success. The use of the AARRR
strategy to penetrate the market adds huge growth to the company. This strategy includes 5 key components
to help a business acquire and retain customers creatively and cost-effectively.

 Acquisition – After the commercial rollout of Jio in September 2016, Jio offered free services to its
customers for 3 months. This plan worked as the trump card for Jio to acquire the customers. Within
one month, Jio was able to acquire 16 million subscribers.
 Activation – The users were provided with the best experience, which was never provided by any
telecom service provider. The unlimited high-speed, 4G data with unlimited calling was
unimaginable to the customers.
 Retention – Jio didn’t stop here. On the occasion of the new year in 2017, they extended the free
services to the users for another 3 months. Jio became the first-ever telecom company to provide 6
months of free service to customers. In just two and a half years into the business, Jio gained more
than 300 million active subscribers. It took more than 19 years for its competitor, Bharti Airtel to
reach such a number. Such was the power of Jio.
 Referral – The customers became its preacher. Jio got more and more business through positive
customer reviews and user experience. This added as a boon to its tremendous growth.
  Revenue – Slashing the prices to 1/10th the existing cost, Jio got ahead with revenue, which was the
major factor in getting such a leap in the market.
This is how Reliance Jio’s business strategy plays out and thus helping itself in being ahead of its
competitors.
Marketing Strategy of Airtel :-
The Business Strategy of Bharati Airtel is one of the biggest reasons for it’s success. Jingles like “ Har Ek
friend Jaruri Hota hai”, “Jo Tera hai, Wo Mera hai” for Gen Z have worked brilliantly for them while
taglines like “one-touch Internet” attract Gen X and elders.
 Airtel has done several such campaigns with taglines like “Sab Kuch Karo, Fir Sahi Chuno”
 The Smartphone that works, Indian’s first 4G network and #expressyourself; has proved their
obsession to win customers through an exceptional experience.
 Famous personalities like Sachin Tendulkar, A R Rahman, Vidya Balan have also endorsed the
brands earlier which have built a positive image among the people.
 Airtel follows a “matchbox strategy” with which it expands regularly in rural India.
The campaigns achieve their goals smartly by their dynamism, warm, friendly appeal; all the more it helps
them gain the trust of their customers. With their priority service as a part of platinum care, they have also
attracted hustlers who like hassle-free service.
Bharti Airtel’s new campaign named “Öpen to Question” highlights its aim to resolve queries of every single
customer, learn quickly from failures and ensure they don’t get repeated. With this Airtel has secured top
position on the ad diagnostics index. 
Airtel has also introduced its banking in 2017 Airtel Payments Bank, India’s first payments bank aims to
take digital banking services to the unbanked over their mobile phones quickly and efficiently which
contributes to the Government’s vision of Digital India and Financial Inclusion. However, this is constrained
to only airtel users.

Q.2:- Debate if RIL is in a position to negate the first mover's advantage of Airtel in offering 4G
services.

Reliance Industries, the only player to have a pan-India 4G licence, is likely to tie up with Himachal
Futuristic Communications to roll out fourth-generation wireless broadband services.
Ever since Bharti Airtel revealed its intention of acquiring Qualcomm's 4G spectrum in order to get the first-
mover advantage in the 4G space, the mounting war between the Sunil Mittal and RIL owner Mukesh
Ambani has become more intense. RIL even tried to prompt competition by lobbying with the government
for a level-playing field, saying its licence period should be extended if Qualcomm got an extension,
otherwise, Qualcomm would get an unfair advantage, it is being contended.
The Department of Telecommunication is considering reducing the licence period for Qualcomm on a
representation from its competitors that giving it 20 years, implies doing it a favour. And now Reliance
Industries, the only player to have a pan-India 4G licence, is likely to tie up with Himachal Futuristic
Communications to roll out fourth-generation wireless broadband services.
With Bharti's launch of 4G services in Kolkata and Bangalore, the only constraint Reliance faced is the
inability to offer voice services in addition to data under 4G. RIL has an inherent disadvantage: it has to
begin laying down a network from scratch since at present it is not offering either 2G or 3G services
anywhere in India. In comparison, Bharti already has a well -defined 2G and 3G network and, therefore, has
an inherent advantage.
The ET report, citing people familiar with the development said, "Reliance-owned Infotel Broadband will
focus on key aspects of the network and monitor the rollout, but will leave ground-level execution and
management to HFCL, which has prior experience of similar deployment." Reliance Industries bought
Infotel from HFCL group two years ago and announced an investment of Rs 4,800 crore. Infotel is the only
company with all-India airwaves for high-speed data services, which it won in an auction for Rs 12,848
crore. HFCL is likely to build a pan-India optic fibre network to carry Infotel's data traffic.
 An HSBC report pointed out that while upcoming BWA
auctions could be an option for RIL to beef up its 4G network, "there are other alternatives available as well,
such as mergers and acquisitions, and as such its participation in the upcoming auctions remains a matter of
debate. We believe RIL may benefit most from procuring 900/700MHz and re-farming of 900MHz spectrum
will be positive for RIL. In the interim, RIL is likely to offer data cards, similar to what Bharti is doing. Key
for RIL will be ability to arrive at mechanisms to provide dense coverage in a cost-effective manner given
the in-building penetration issues with 2,300MHz spectrum."
With the HFCL tie-up, experts expect RIL to replicate its entry
strategy for mobile voice services in the early 2000s, when it offered subsidised handsets and cheap call
rates that transformed the telecom market, said the ET report. Infotel Broadband Services is already planning
to set up over 100,000 towers for its 4G Long Term Evolution operations in the next three years rather than
using the passive infrastructure of other telecom tower companies. Reliance's decision to set up its own
towers is seen as a strategic shift from its earlier plan to have an asset-light model.
By the above steps we can see that, RIL is in a position to negate the first mover's
advantage of Airtel in offering 4G services.

Q.3:- Deliberate the entry strategies of RIL.

On 1st September 2016, as chairman Mukesh Ambani launched Jio after a 45 minute speech at the Reliance
Industries Limited (RIL) AGM, telecom giants Bharti Airtel, Idea Cellular and Reliance Communications
lost a whopping $2 billion in the stock market.

28 months on, Jio's entry has forced India's largest merger with Vodafone-Idea, cornered Bharti Airtel into
posting its first quarterly loss in over 15 years, and put as many as five telecom providers out of business,
while simultaneously achieving three consecutive quarters of profit in 2018.
The Entry strategies of Jio broken down into five key pillars :

1. Foundation: In 2010, RIL acquired a 95% stake in Infotel broadband - the only firm that held
broadband spectrum in all 22 zones in India - for $1 billion. A month before the acquisition, Mukesh
and his estranged brother Anil Ambani reached a truce by nullifying all non-compete agreements
(Read more about the history of the non-compete agreement here : https://bit.ly/2T8M7zR) . With
commercial operations yet to begin, Jio had over 2.7 lakh kilometres of optical fiber so as to establish
network coverage in 18,000 urban centers, and in over 200,000 rural centers. Mukesh Ambani, in his
launch speech, also emphasizes that the timing was chosen when India had a 4G phone penetration of
70%, making it ideal for the spectrum that Jio provides.
2. Network Advantage: Offering a 4G only service, Jio became the only operator in India to do so.
Being a greenfield operator, it can also capitalize on the advantage of building a network that is
capable of upgrades to 5G, 6G and other future spectrums, easily. Unlike the existing players in the
telecom industry, Jio does not have to invest in maintaining and operating outdated and expensive 2G
and 3G lines. The company also has the highest capacity to accommodate future data demand - 129k
TB/day - which is 25% more than India’s biggest telco Vodafone Idea.
3. Product Offering: Unlimited free voice calls, a Jio suite of products that includes JioTV, which
allows HD streaming on your phone, inexpensive 4G phones under their 'LYF' brand, and portable
WiFi-routers that allow tapping into the Jio network to use data on devices other than a
smartphone. Reliance created an end-to-end user product through Jio - cheap hardware, advanced
technology at discounted prices and a gambit of software offerings.
4. Pricing: The prime aspect that sets Jio apart. With the lowest data rates in the world, Jio sent
shockwaves through the Indian telecom industry. Data plans ranging from $0.3 to $80 a month, the
company focused on simplifying tariff plans to cater to a wider audience. Prior to Jio, customers
were paying $0.1/min for voice calls and $4/GB for data on average. In his launch speech, Mukesh
emphasized that India had over 22,000 tariff plans from all operators and Jio's aim was to make it
simple for customers to understand. The image below comapres tariffs between Jio and the existing
operators. At the end of 2016 , India's 4G consumption stood at 8,050 TB (i.e. 13% share of all data
consumed) which makes it evident that the 'unlimited voice calls' was the offering that Jio banked on
for similar price points as competitors.
5. Aggresive Entry Strategy: With the aim of testing network capacity and acquiring 100 million
subscribers within 90 days of launch, Jio introduced an offer that would provide free unlimited
services for customers who signed up before the 90 days. The offer was unexpectedly extended for
another 90 days thanks to a loophole in the TRAI regulation. Jio eventually met its target subscribers
within 180 days of launch, which was 8% of the market share.

These were the entry strategies which were used by RIL to get huge success in the Indian Telecom
Industry.
6. CONCLUSION :-

I can here by conclude that Jio and airtel has carried out huge impact on the entire telecom industry.
It can be discussed that digital tsunami was required in the Indian telecom industry and both JIO and
Airtel has played a critical role in transforming the entire sector by bringing the digitalization within
the entire industry. Present research was to gain insight and overview of the Indian Telecom industry
and it can be concluded that the industry has become very competitive. In context of the total number
of subscribers, it can be asserted that Indian telecom sector is the second largest sector in the world
with more than 1.19 billion subscribers. It has been also found that Indian Telecom industry is
considered as the fourth largest application economy across the entire globe.