Reliance Industry chairman Mukesh Ambani-owned Reliance Jio is not only a threat to the existing mobile operators in telecom industry, its competitive pricings and offers is also fracturing the mobile virtual network operator (MVNO) market opportunities in the country. According to experts, the MVNO market, which is worth Rs 26,000 core, could take a serious hit with Jio s disruptive pricing. Also Read - Jio maintains lead in 4G download speed, Vi in upload in May: TRAIAlso Read - Airtel launches new Rs 456 prepaid plan: Check data, validity, call and other benefits
How an MVNO is different from an operator like Airtel India, or Vodafone, is that a mobile virtual network operator is a wireless communications services provider that does not own the wireless network infrastructure over which the MVNO provides services to its customers. Similar to Reliance Jio, which also shares spectrums from other existing telecos in the country. For instance, in September 2016, Jio signed a pact with BSNL for intra-circle roaming, which would enable users of the operators to use each other’s 4G and 2G spectrum in national roaming mode. Also Read - Jio Freedom Plans 2021: Jio launches 5 new prepaid plans with no daily data limit - check details
However, the experts are convinced that the MVNOs are likely to find it tough to negotiate viable terms with potential partner telcos, which are engaged in a bruising battle to hold on to margins, amid rising competitive intensity following Jio s entry. ALSO READ: Reliance Jio Summer Surprise may prompt counter offers from other telcos: Analysts
The dynamics for the MVNO industry could change with Jio s ultra-affordable pricing impact, and with the number of telcos also likely to fall with the current wave of consolidation, the parenting landscape for VNOs might also shrink as there will be fewer telecom operators, Amitabh Singhal, director, Telxess Consulting Services, told ET. Further, EY s global telecom leader Prashant Singhal seconds Singhal s thought that the disruptive pricing by Reliance Jio greatly affects telecom company s mobile data revenue growth.
Along with low pricing, Jio continues to increase data allowance leading to an effective downfall of the price per GB. Consequently, the pricing has entirely changes the benchmark for suitable service pricing for entry-level customers in the country. ALSO READ: Reliance Jio to register a loss of Rs 19,600 crore in 2017-18: IIFL
However, Future Group CEO Kishore Biyani, believes the telecom regulator s recent proposal of having district-level virtual networks is executable as there is adequate demand in the market. India is all about regions and there are regional players in everything (segment) in the country, so there s no reason something can t happen regionally, Biyani had told ET. In fact, Future Group itself has applied for a nationwide MVNO permit for its brand T24, and has teamed up with Tata Teleservices for offering its services.
As part of the MVNO policy, government is now extending 10-year permits with an entry fee of Rs 7.5 crore for virtual network operators seeking to launch voice and data services across all circles.