In July 2016, Reliance Jio Infocomm Limited (RJIL), the company led by the richest man in the country, Mukesh Ambani, announced their arrival into the Indian telecom sector, with their unlimited calling and a high volume of internet data free for three months, and continuing afterwards at astonishingly cheap prices. However, it is obvious that the intention of the firm is to make a profit, in the long run, so was Jio a mistake or a masterstroke?
An incredible ₹1.5 lakh crore rupees were invested in this venture. Reliance Industries Limited (RIL) is a very diverse company, with concerns and subsidiaries in quite a few different sectors. Therefore the other alternatives that could have been, and the places this investment could have gone, must be considered.
This is one sector that RIL has not taken any steps in. Given the transition of the Indian economy to a middle-class economy, coupled with increasing financial literacy amongst all generations of the Indian population, banking seems like a sector with a lot of potential for growth. With the implementation of demonetisation in India and its progress towards a cashless economy, the banking sector becomes more imperative each day for the majority of the Indian citizens.
If there is one company in India that has the financial resources to invest in a field as capital intensive as commercial spaceflight, then it is Reliance Industries. With the recent developments and successes of ISRO, it is not prudent to assume that India is too backward to think about space exploration. It has the technology, it has the qualified manpower and with the Indian economy soon poised to become the fastest growing major economy in the world, it has the financial resources as well. The Virgin group in the USA and Elon Musk have come up with space transport companies, namely Virgin Galactic and SpaceX. Even Reliance should look at this option in the near future.
Reliance is an establishment that invests with the future in mind. According to Reliance officials, as of now, Jio is the only Indian telecom service provider that is ready for 5G due to its elastic network and deep fibre. Keeping that in mind, another sector they should consider is robotics. Robotics here refers to the automation and machinery that is increasingly becoming common in factories all around the world. Again if the Indian perspective is factored in, as the economy’s dependence on the primary sector decreases, the prominence of the secondary sector increases. Manufacturing in India also makes economic sense, given its abundance of cheap labour. Local and foreign investors alike need machinery, and Reliance can afford to invest in Research and Development and production and establish a stronghold in this field as well.
Jio has not done too badly, however. Recent figures (June 2017) show that Jio has garnered more than 12 crore subscribers in the time that it has been operating so far and the Average Revenue Per User (ARPU) has climbed to ₹300 per month. This figure is especially impressive, because the average ARPU of Airtel, Idea and Vodafone, its three closest competitors is just ₹195 in comparison.
It has definitely proved to be a game changer in the telecommunications sector around the globe and ensures future growth prospects if it continues to provide value and benefits to its potential as well as existing customers. This future-ready network can be easily enhanced to 5G and beyond. With ambitious plans to acquire 50% of the market share in the next two to three years, it is surely on the right track to indeed be considered a masterstroke.