BUSINESS MODEL OF RELIANCE JIO

• Basic factors about indian telecom market
  • 100 crore mobile subcriptions in india
  • 34% population have access to internet
  • Among those using mobiles, only 105 use 3g or above

Now there is not gonna be any large movement in voice now because almost everyone has phones. Future lies in the internet because:

• • if you have good speed internet, no one will use messaging and will make calls over internet only.
• Whats different about jio:
  • Optical fibre network of 2.5 lakh kilometres.
  • Optical fibres is better than other cables as the data transfer capacity is very high compared to mobile towers.

• How much has jio invested:
  • 1,50,000 crores ($22 billion) in optica fibres.
  • This is more than 2 times the total investment of aitel, Vodafone and idea in 4g segment ( and remember most of the other investments are nt even complete as of now)
• Masterplan :
  • Step 1 – undercut the market price by giving attractive discounts
  • Step 2 – let everyone switch to jio for cheap internet rates
  • Step 3 – unleash the powe of optical fibres to give superfast internet
  • Step 4 – increase customer base
  • Step 5 – recover investment with this large customer base

Once you have laid out optical fibres network, cost of operating is very low so you only have to focus on increasing the customer base.

They are not charging for voice as they don’t care about voice. This attracts more customers and then they will show its data capability.

Its network is capable to handle amazing internet speeds so it encourages its users to use data. This way you kill the entire market of your competitors.

• How many subscribers do they need:
  • They are charging ₹70/GB of data. Lets assume tha their contribution (profit befor fixed cost) is ₹50 / GB of data. (even those is on the lower side ; per GBcpst is gonna be lesser)
  • If 30% of people of India use 2gb per month, then investment will be recovered in 3 yrs.
  • Mukesh’slan is to capture 90% of the country by next yr.
  • So, my calculations are quite conservative on that front.
• Mukesh’s biggest bet:
  • Whole master plan is based on : volume