Introduction to Indian Telecommunication Industry and key players

Telecommunications Industry has been one of the most important in the era of
technology boom and disruptions. In India, since the globalization of Indian
economy in 1991, it has witnessed a tremendous change and growth. As per the latest
date from TRAI, Indian subscriber base is currently at 1.1 billion with 1 billion
active customers.
Until 2016, Telecom industry had several players competing for market share and
Average revenue per user (ARPU). Airtel, who was the market leader with market
share 31.7%, led the market. Vodafone, Idea, Aircel, RIL, BSNL, MTNL, Tata
Telecommunications and Telenor were the other players in the market. Airtel has
been riding on its 4G launch into the market. It was offering 4G at the price of 3G
to its customers. However, the customer had to pay for voice calls and internet
(data plan). An Ala carte and bundled package option was given to the customer. A
typical monthly package to Airtel customer costed about Rs.470 with a validity of
28 days.
The year 2016 had been a monumental year in the history of Indian Telecom, which
saw the birth of a new telecom service provider headed by the Reliance group called
as Reliance JIO. After buying 96% stake in Infotel Broadband Services limited
(IBSL) for Rs. 4800 Crore, IBSL was renamed as Reliance JIO and started its
commercial operations on 5 September 2016 after its beta launch to its employees
and celebrities. Since 2010, Reliance had been strategically investing in JIO to
build the infrastructure by M&A and developing their own network in addition to
auctioning for spectrum license.
Reliance JIO strategic decision was to opt for Voice over LTE (VoLTE) and not to go
with existing 2G or 3G for the voice calls. In addition to this, Reliance JIO
offered lifetime free calls to all its customers and 1GB/day internet data at a
nominal cost of 149/month. This led to a huge disruption in the market and started
to erode the customer base from the existing players. The other key players such as
Airtel had to slash its own prices and repackage all its plans to stop the fleeing
of customers to JIO, which kick started the price war in the telecom industry. The
pricing by Reliance JIO was called predatory pricing, which implied that any
further drop in prices reflected directly on the sustainability of the companies.
Few of the players such as Aircel, RIL filed for bankruptcy, as they were unable to
withstand the intense price war. Airtel and Vodafone had been going through a blood
bath shedding profits and customers.