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Reliance Jio – The Indian Telco Dials D for Disruption

CASE STUDY, STRATEGIC MANAGEMENT
Prin.L.N. Welingkar Institute of Management Development and Research, 13 Pages

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Reliance Jio – The Indian Telco Dials D for Disruption

 

“As the world goes digital, India and Indians cannot afford to be left behind. Today, India is ranked at 150th in mobile Internet rankings out of 230 countries. We have a responsibility. To digitally empower India. To end this digital poverty” 1

– Mukesh Ambani, Chairman and Managing Director, Reliance Industries Limited


July 2016: The Management at Reliance Jio Infocomm Limited (RJIL) was upbeat on the launch of their ‘Lyf ’ smartphones that had Jio 4G2 enabled Subscriber Identity Module (SIM) cards. The Lyf smartphones came with a three month unlimited data preview offer and aimed at selling in the metropolitan areas of Delhi-NCR, Mumbai, Bengaluru and Chennai.3 Further, reports suggested that RJIL was to expand this 3 month unlimited data preview offer to the Samsung smartphone users in India as well. RJIL was part of Reliance Group – a well-known family business group in India.

In 2005, because of a family feud, the younger brother Anil Ambani received the ownership of Reliance Communications (RCom) and elder brother Mukesh Ambani (Mukesh) received Reliance Industries Limited (RIL)4. In 2010, RIL acquired Infotel Broadband Services Private Limited (IBSPL), the only firm that had won the bid for pan India fourth Generation (4G) network services in the same year (2010). Later in 2013, RIL rechristened this acquisition as Reliance Jio Infocomm Limited (RJIL). In December 2015, RJIL made its test launch of 4G network services among its own and group company employees. The commercial launch earlier scheduled for March 2016 was postponed for later half of 2016.

 


 1 “Jio 4G service will rank India among top 10 nations in digital world: MukeshAmbani”, http://www.business-standard.com/article/companies/jio-4g-service-will-rank-india-among-top-10-nations-in-digital-world-mukesh-ambani-116033000497_1.html, (accessed date: July 2nd 2016)
2 4G refers to fourth generation mobile technology, which transmits data faster than the third generation or 3G. Consequently, 4G is more suitable to access social networking sites, video streaming, etc.
3 “Reliance Jio begins sale of 4G-enabled Lyf phones; offers free unlimited data for 3 months”,http://economictimes.indiatimes.com/articleshow/52562462.cms, (accessed date: July 21st 2016)
4 The Anil Dhirubhai Ambani group owns Reliance Capital, Reliance Communications, Reliance Infrastructure, Reliance Entertainment and Reliance Power; Mukesh Ambani”s group consists of exploration and production businesses, petroleum refining and marketing, security services, textiles, retail and petrochemicals besides Jio Infocomm. (http://www.relianceada.com/ada/overview.html ; http://www.ril.com/)

Teaching Note Preview

Reliance Jio – The Indian Telco Dials D for Disruption

 

Synopsis

In July 2016, the Mukesh Ambani (Mukesh) led Reliance Jio Infocomm Limited (RJIL) launched Lyf brand of smartphones in Indian metropolitan areas with Jio 4G enabled SIM cards. The commercial launch of Jio SIM was scheduled for the later part of the year. Their Lyf smartphones came with a three months unlimited data preview offer. The company differentiated its products based on network, technology and content. LTE technology used packet data for transmission and RJIL recommended transfer of voice calls as well with the LTE technology termed as the new technology VoLTE. It offered pan-India 4G services using LTE technology.1 LTE technology used packet data2 for transmission and RJIL recommended transfer of voice calls as well with the LTE technology termed as the new technology VoLTE. This meant VoLTE enabled users had the advantage of free voice calls using the broadband network. This was fundamentally different from RJIL’s rivals who offered discreet data and voice packs using 2G or 3G networks. However, VoLTE being a new technology mandated company to develop the necessary infrastructure such as IP Multimedia Subsystem (IMS)3 and LTE enabled smartphones to offer the best usage to its customers. RJIL promised a bouquet of other applications as well revolving around education, healthcare, e-commerce, social media and gaming using this technology. Besides the necessary infrastructure, the company wanted VoLTE enabled smartphones. The company had signed partnership agreements with the leading smartphone manufacturers such as Samsung, LG, Lenovo, ZTE, Intex, etc., to manufacture VoLTE supported smartphones.4

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Expected Learning Outcomes

  • • Conduct and understand a general environment analysis, industry and competitive analysis
  • • Provides insights on the evolution of Indian telecom industry
  • • Critically evaluate the firm’s strategic positioning and scope in a competitive environment

 

Case Positioning and Setting

The case study is appropriate for MBA Programs in a Strategy formulation module after the fundamentals concepts and theories of strategic management have been discussed. The case study focusses on the internal and external environment analysis to understand the company’s future success.

Prerequisite Conceptual Understanding

  • • Michael E. Porter, “The five Competitive Forces that Shape Strategy”, Harvard Business Review, 86 (1), 2008, pages79–93
  • • Michael E. Porter, “What is Strategy?” Harvard Business Review, 74, 1996, pages 61–78
  • • Michael E. Porter, Competitive Advantage: Creating and Sustaining Superior Performance, Free Press, New York, 1985

 

Assignment Questions

  • I. Map the evolution of telecom industry in India. List the key growth drivers of this industry in recent times. How did RJIL plan to leverage these key drivers to its business advantage?
  • II. ..............

 

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Abstract

In July 2016, Reliance Jio Infocomm Limited (RJIL), the company led by Mukesh Ambani, a known Indian industrialist entered the arena of the Indian telecom sector by launching Lyf smartphones with JIO SIM cards. RJIL smartphones used Voice over Long Term Evolution (VoLTE), a new technology where voice calls transmitted as data packets over the fourth Generation (4G) network services. This meant VoLTE-enabled users had the advantage of free voice calls using the broadband network. This was fundamentally different from RJIL’s rivals who offered discreet data and voice packs using 2G or 3G networks. RJIL also proposed a lucrative initial promotional offer of 3 months free data subscription and was optimistic to reach 100 million subscribers within a year of its launch.

Nevertheless, the commercial launch of the JIO SIM cards was delayed and it benefited their archrival Bharti Airtel Limited who already gained first mover advantage by launching 4G services in December 2015. The other service providers in the market such as Vodafone India and Idea Cellular had also upgraded to 4G telephony in  2016. Consequently, RJIL had a challenging task of attracting customers to their offering. VoLTE being a new technology in India mandated the company to develop the necessary infrastructure, resulting in a huge investment of INR1.5 trillion. Further, VoLTE had compatibility issues with other network services. Besides, the users  needed VoLTE supported mobile handsets to enjoy seamless services.

While RJIL had won the pan-India bid for 4G network covering all 22 telecom circles, there were certain unanswered questions such as whether VoLTE would be able to provide a better user experience? What price point advantage could RJIL offer? Was RJIL capable of becoming a disruptive force in the Indian telecom or would they turn out to be a devastating failure?



Pedagogical Objectives

  • To conduct and understand a general environment analysis, industry and competitive analysis
  • To provide insights on the evolution of Indian telecom industry
  • To critically evaluate the firm’s strategic positioning and scope in a competitive environment

Case Positioning and Setting
The case study is appropriate for MBA Programs in a Strategy formulation module after the fundamentals concepts and theories of strategic management have been discussed. The case study focusses on the internal and external environment analysis to understand the company’s future success.



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