Mobile connectivity in India has soared in recent years, due in no small part to the ambitions of Mukesh Ambani and his mobile network, Jio.

By November 2018, the number of broadband internet connections in India had leapt from about 125 million in 2015 to 512 million. At the current rate, 16 million connections are added each month – and nearly all are on mobile phones. In terms of mobile data, Indians now consume more than most Europeans.

The engine behind this boom is Jio, and more specifically its founder, Mukesh Ambani, India’s richest man. He inherited one of the country’s biggest conglomerates, Reliance Industries Limited (RIL), from his father. This backing has enabled him to offer cheap high-speed data across the Indian market. Rather than charging for calls, Jio gives calls and text messages away alongside data. It also makes its fairly feature-rich JioPhone available for next to nothing: Customers pay only a refundable deposit of 1,500 rupees ($21) for the device. Jio now has 280 million users.

Ambani sees Jio as a launching pad for more services, starting with ecommerce. On January 18 he announced that Jio will join with RIL’s massive retail arm, Reliance Retail, to launch a new ecommerce platform. Reliance already has strong logistics, warehousing and distribution capabilities in place. With this head start, Jio wants to take aim at Amazon and Flipkart, a local ecommerce firm acquired by Walmart last year. Other digital services are being considered as well.

By making connectivity accessible to so many, Ambani has reshuffled the entire Indian telecoms sector, virtually elbowing competitors out of the market. Six other firms have folded, shrinking the industry down to just four major players. Former market leader Bharti Airtel now relies on its enterprise and African businesses. Vodafone merged with another firm, Idea, and the new group is selling assets and raising capital to cover its cash flow deficit, The Economist reports.

While Jio has certainly had an impact on the domestic market, it remains to be seen whether it will pay off for RIL and its shareholders. RIL has invested $32 billion in Jio, with limited return. One reason is that despite the major spike in connectivity, driven largely by Jio, total revenue in Indian telecoms has shrunk by 21% since mid-2016. Even Jio is falling short. In 2017 the company said it would capture a 50% revenue share of the market by 2020, and that the market itself would grow by 50%. But Jio has made the industry smaller in revenue terms, and its share is now about 26%.

According to one analyst, prices will need to go up by about 50-70% to make India’s telecoms industry profitable again. RIL’s share price has risen 28% in the past 12 months on hopes for Jio’s future profitability. In the meantime Ambani is pursuing enterprises beyond telecoms and ecommerce. RIL is now preparing to launch a new firm that will provide wired broadband to homes, and eventually web hosting for businesses. The conglomerate has also invested in content creation.

These expansions will pit Ambani against big tech firms including Google, Amazon and Flipkart which, seeing Jio’s connectivity explosion, are investing heavily in India. Foreign firms worry that the government may favour Jio, the local champion, and throw up more regulatory roadblocks. However, both foreign and domestic firms face regulatory challenges. Ambani has conquered the market, but soon enough he will need to woo regulators.

This website uses cookies to ensure you get the best experience on our website.  Learn more