There are no new ideas. Only rediscovery or remixing.

The $80-billion Reliance Group’s strategy to disrupt and upend Indian telecom with its Jio brand is testament to this adage, even though the latter’s roots lie in literature and the creative arts, not business.

Customers in multiple Indian cities are currently signing up for free Jio fiber broadband at speeds of up to 100 Megabits.

India’s broadband penetration is under 10% and its average broadband speeds are abysmally low at around 6.5 Mbps.

In late July, Jio announced free 4G feature phones (provided customers agreed to pay a deposit and stay locked in for 3 years) to wrest the middle of India’s telecom pyramid from incumbents.

There are 500 million feature phone customers in India.

Last September Jio launched with free data and voice services over a state-of-the-art 4G wireless network. It would be 9 months till India’s telecom operator warned it to stop offering free services in a regulated and competitive market.

But by then, Jio had already crossed 100 million subscribers.

It’s clear that for Reliance Jio, “free” is its hammer and every telecom-based market segment – smartphones, feature phones, wired broadband, cable TV, digital payments, banking, home automation, homeland security – a potential nail.

Of course, the hammer isn’t original. Remember, there are no new ideas?

“Free” was something Reliance discovered in 2003 when under Mukesh Ambani it first launched a telecom company – Reliance Communications. The playbook was the same – free or ‘almost-free’ services and products combined with an unprecedented blitzkrieg of capital, marketing and PR in an attempt to dislodge competition.

But today, Reliance Communications lies in tatters. Can Reliance Jio avoid the same fate?

Zero to hero

In spite of being commercially available for nearly a year and having invested over Rs 200,000 crores (appr. $30 billion), nobody knows what Jio’s revenue is. Because they haven’t announced it yet. A lot of criticism of the company has been on that front.

But with Reliance, what you see is never what you get.

“If you normalize things, Jio is probably sitting on around 7-8% of the industry’s revenue right now. And by the end of the year that might touch 10-11% on a run-rate basis,” says Chris Lane, telecom analyst with Bernstein.

That’s just the beginning. “I don’t think Jio will be happy with anything less than 30%,” says Lane.

And that isn’t enough a very far-fetched number. “Jio will get to 15% revenue market share if they fell asleep at the wheel today. And 20% if they do even a middling job on execution,” says a senior industry executive at a rival telco.

Suffice it to say, Jio will be aiming to avoid both falling asleep at the wheel or middling execution.

AUTHOR

Rohin Dharmakumar

Rohin is co-founder and CEO at The Ken. He holds an MBA from the Indian Institute of Management, Calcutta and an engineering degree in Computer Sciences from the R.V.C.E., Bangalore.

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