Will Ambani announce Reliance Jio tariffs, MNP launch on Thursday?

mukesh-ambaniWith only three more days to go before Reliance Industries chairman Mukesh Ambani makes his once-in-a-year speech to his shareholders, there is strong expectations that Reliance Jio — the group’s telecom arm — will make its commercial launch date and other details public on the day.

Ambani typically uses Reliance Industries’ annual general meeting (AGM) to lay out a clear roadmap of all the different projects that the group has ongoing, and this time, the focus will largely be on Jio.

India’s richest man will also a point to prove as he arguably failed to deliver on his last AGM promise to make 2016-17 the first full year of commercial operations. To deliver on his promise to shareholders last year, Reliance Jio would have had to start selling its connections at least on Apr 1 this year.

However, it started selling connections — that too under a bundled offer — around May 5 — late by a month. The sales have since been expanded to include practically everyone with a 4G handset in India.

However, Jio has been forced to ramp services an carefully graded fashion to avoid stressing the network or its sales and distribution network.

Instead of starting SIM card sales all at once, it staggered the sales of new SIMs by opening it up to users of a particular brand of smartphones on a particular week.

This was done to avoid overwhelming Jio’s user verification and activation department, and to ensure that activation deadlines are met. (However, despite this, users are facing big delays in getting activation done.)


Due to the staggered introduction of services, the term ‘commercial launch’ has more or less lost its meaning as the only service remaining to be opened up is mobile number portability.

However, the ability to offer MNP is not as crucial today as it used to be — particularly for a data-oriented operator.

Since nearly all 4G models today come with dual-SIM slots, people are using Jio’s SIM in the second slot even while continuing to attend calls on their regular number on the same handset.

Besides MNP date, the only substantial thing left for Mukesh Ambani to reveal during the AGM speech will be details of Jio’s 4G tariff plans. Though he is unlikely to go into details in his speech, he is likely to reveal the exact date of Jio’s commercial launch and shed some light on pricing.


The company’s tariff structure is the most crucial piece of information that the market, the consumers and the shareholders are waiting for.

Unless Jio prices its data at least 40% cheaper than competitors like Bharti Airtel, Vodafone and Idea Cellular, it will be difficult for the company to continue to attract new consumers at the rate it is currently doing.

If for example, Jio’s tariffs are only 30% cheaper than those of the incumbents; the others will almost immediately cut their data prices to the same level.

While the Mukesh Ambani firm will generate some goodwill from consumers for driving down prices, such a development will significantly impact the customer acquisition speed of the new operator by denying its biggest USP — higher efficiency resulting in lower prices.

On the other hand, if Jio’s prices are 50% below those of the others, the competitors may be forced to think twice before cutting their data prices.

Besides, data pricing is not the only place Ambani can hit the others.

A crucial part of the emerging competitive scenario will be how Jio prices voice calls.

According to market speculation, Jio’s likely to offer call tariffs of around 25 paise per minute.

In comparison, the average call tariff of Bharti Airtel, Idea Cellular and Vodafone is about 55-60 paise per second. Most of their customers actually pay in the range of 60-72 paise per minute and keep their conversations short.

Voice is where the incumbents are likely to be hit hardest as this segment contributes 70-75% of their revenue and profit.

If the incumbents are forced to cut their call rates to 25 paise per minute,  these companies — which have less efficient, older networks — will be pushed into losses.

As such, they are likely to do only modest cuts, and could offer rates between 35-45 paise per minute.

However, they also enjoy a crucial technological edge when it comes to voice — their networks support 2G, 3G and 4G handsets, while Jio only supports 4G handsets as of now.

Still, being forced to do a 20 paise cut would severely, though not mortally, wound these companies.

In their most lucrative circles — which they dominate — their call rates are about 60 paise per minute.

Out of this 60 paise, 30-40 paise currently go towards their operating profit, and it is this profit that will be hit hard by any reduction in call rates.

To make things worse, if the profitability reduces — or if they are pushed into losses — these companies won’t be able to generate the funds required for making new investments into 4G.

At present, the big three operators have only a fraction of the 4G capacity that Jio has.

Though they have additional 3G capacity to compete with Jio, they must still spend thousands of crores of rupees to simply catch up to Jio’s wireless data capability today.

Besides Jio’s rivals, another group of people who will be anxiously waiting for the company to announce its tariffs will be the consumers.

Since the shuttering of RCom’s CDMA service, it will be for the first time that these consumers will have a pan-India service that offers call rates of 30 paise per minute.

Though operators like Aircel and Tata DoCoMo do offer calls at the rate of 25-30 paise to heavy users, these networks cannot provide the ubiquitous network coverage that Airtel, Vodafone or Idea can.

Jio, however, is not expected to have any problems in coverage because of its use of 850 MHz spectrum. The GSM services of Aircel and Tata DoCoMo run on 1800 MHz spectrum, which has poorer propagation characteristics.

A single tower using 850 MHz spectrum is equivalent to several towers of 1800 MHz spectrum in terms of coverage.

As such, Jio’s 1.5 lakh towers should give enough coverage to rival that of the incumbents like Airtel and Vodafone, and offer a significantly superior coverage compared to other low-cost GSM operators like RCom, Aircel and Tata DoCoMo.

This should spell a bonanza for customers who can look forward to a steep corrections in both data and voice prices if Jio announces cheap tariffs.

On the other hand, the possibility of the Mukesh Ambani firm surprising the market and offering call and data rates in line with what the incumbents offer can also not be totally ruled out.

However, the chances of that happening are very very slim right now. Jio has a target of attracting 10 cr customers within the first year, and technically, its first year has already started.

It is therefore no wonder that crores of telecom subscribers, as well as thousands of telecom investors, will be holding their breath when Mukesh Ambani takes the podium at Reliance Industries’ 42nd annual general meeting this Thursday.


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