Reliance Jio‘s disruption of Indian telecom is well-documented by now. While consumers have enjoyed the extensive freebies, and Jio has notched up fast subscriptions, rival telecom operators have bled and how. Almost all of them have ceded market share to Jio, recorded a drop in ARPUs, and suffered huge quarterly losses. Sunil Mittal, Chairman of Bharti Airtel, has revealed in a media interaction that all telcos were forced to write down investments close to $50 billion due to Jio’s entry. Also Read - Jio Freedom Plans 2021: Jio launches 5 new prepaid plans with no daily data limit - check detailsAlso Read - How to recharge your Jio number via WhatsApp
The Mukesh Ambani-owned operator’s free voice and data services compelled incumbents like Airtel, Vodafone and Idea to drop tariffs drastically in order to retain consumers from flocking to the fully free, and then effectively free Jio network. An already debt-ridden telecom sector recorded further hits as bigger players took a pounding on their bottomline, while the smaller ones like Aircel, Tata Teleservices, Telenor, and Reliance Communications struggled to merge with them. Tata Tele, of course, has been acquired by Airtel now, while RCom is shutting down its voice services. Also Read - 5G JioPhone launch could be around Diwali this year, price to be around Rs 3,500
“My estimate is about $40-50 billion have been written off by various companies, many of whom are international investors. It [the write-offs] is largely due to Jio… the pricing. Having such a long, free promotional period and in some sense, decided by laws of the land in their favor, is unheard of. In my opinion, in Europe or US, this would have been stopped. It would have been seen as predatory,” Mittal told ET. The Airtel chairman had in 2015 said that Jio’s entry would lead to a consolidation in the domestic telecom industry. However, what eventually happened is unprecedented.
Speaking of the Vodafone and Idea merger, that will be completed in early 2018, Mittal said, “Market has consolidated to a level which was an aspiration, but never thought to be possible. No. 2 Vodafone and No. 3 Idea being put together, is unprecedented… you never see two strong companies merging.” The Vodafone-Idea combine will create India’s largest telecom operator with over 400 million subscribers, and will push Airtel (current market leader) down to the second spot. Mittal, however, is confident that Airtel would top the market in revenue terms soon. He reckons that sector consolidation is working in his Airtel’s favor.