Beruflich Dokumente
Kultur Dokumente
Assignment- 1
1. Introduction
2. Scope
3. Pricing Strategies & Concepts
4. Study & Findings
5. Conclusion
In this case study, we will focus on mobile usage, strategies used by operators, pricing and effect
of launch of Jio which has changed the dynamics of telecom industry in India.
Two-part pricing:
Two part pricing implies is composed of fixed fee and then charge a per unit fee for each
unit which is purchased.
Bundling:
It is the practice of bundling two or more products together to sell it in single combined
unit.
Penetration pricing:
This is the type of pricing strategy where the price is initially set to low to attract the
customer.
Trail Pricing:
This is the type of pricing strategy where the price of a new product is lowered initially to
attract the customers for a limited period
Economies of scale: In this industry economies of scale comes from the supplier.
Therefore, operators must increase subscriber base for the success.
License Fees: Large capital is involving in getting a license to operate in this industry.
Despite these challenges, Jio became fastest growing telecom operator and in a short span of 6
months with its pricing strategies and investment it has achieved a subscriber base of 72.2
million.
9% BSNL
Tata Teleservices
8% 19% Aircel
Telewings - Uninor
17% Jio
Jio was officially launched on 5 September, 2016. Above chart shows market share of top
players before launch of Jio with a total of 1028.9 millionsubscribers. Here we can see
operators like Sistema, MTNL, Telewings – Uninor are present in this industry for more than a
decade still have a very small subscriber base.
5%
Bharti Airtel
9%
25% Vodafone
6% Idea
Reliance
9% BSNL
Tata Teleservices
Aircel
8% 19%
Telewings - Uninor
Jio
17%
6% Bharti Airtel
5% Vodafone & Idea
24%
8% Reliance
BSNL
5%
Tata Teleservices
8% Aircel
Telewings - Uninor
8% Jio
35%
Others
The above chart shows market share of top players on 25 March 2017. Total subscribers has
increased from 1028.9 to 1124.5 withan increase of 95.6 million subscribers
subscriber and out of which
72.2 are of Jio with a market share of 6%
80
70
60
50
40 Jio
30 Existing
20
10
0
Aug-16 Sep-16 Oct--16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17
17
Jio used Trial Pricing and Penetration Pricing strategy to enter highly competitive market
with zero Rs. plan.
This strategy became game changer in telecom history of India and new era of price war began.
All other operators made hue and cry before TRAI and CCI.
Telecom Operators always have Tacit Collusion. They understand the risk of price war so send
unofficial signal not to compete over price. Due to this aggressive pricing, Jio became dominant
player in setting up the price compelling other players to match.
Earlier, existing operators focused more on voice call than data as 70% of their revenue come
from voice call. Due to launch of Jio with focus only on data compelled other players to change
their revenue model with more focus on data.
Two-part pricing
1 Year Subscription Fees 99
28 GB Data validity of 28 Days 303
Apart from this it also extended the free usage till 31st March 2017. Due to this pricing, other
operators also reduced their data plans.
Predatory Pricing:
Airtel, Vodafone & Idea formed a consortium and complained to TRAI alleging Jio for
Predatory pricing. TRAI rejected their complain giving clean chit to Jio
Other strategies that helped Jio to come up with such aggressive pricing:
1. In June 2010, Reliance Industries (RIL) bought a 96% stake in Infotel Broadband Services
Limited (IBSL) for 1 Billion USD. Although unlisted, IBSL was the only firm to win broadband
spectrum in all 22 circles in India in the 4G auction that took place earlier that year. Later
continuing as RIL's telecom subsidiary, Infotel Broadband Services Limited was renamed as
Reliance Jio Infocom Limited (RJIL) in January 2013.
On the other hand, all existing operators did not bid for 4G broadband spectrum rather
concentrated on 3G spectrum which cost them 16 Billion USD.
2. After split of Reliance Industries Limited into RADAG & RIL 2005 a no compete agreement
was signed between both companies. This agreement was mutually scrapped in 2010 just before
acquiring IBSL.
4. Jio has signed agreement with BSNL which allows Jio to use BSNL’s 2G spectrum in rural
areas and BSNL can use Jio’s 4G spectrum in near future.
5. 3G has limited bandwidth and have limited support of data and call simultaneously. All other
operators still use 3G technology for call and SMS. On the other hand, Jio works on 4G
technology which can handle data and call simultaneously. Therefore, Jio use voice call on
VolTe which uses data for making voice calls.Jio has set up its 4G technology with technical
collaboration with Samsung. Its 4G technology can easily migrate to upcoming 5G.
Telecom service providers have earned a higher margin with traditional calls, almost 500 per
cent more than voice over. With JIO offering the window to calls over internet, the industry
is looking at a serious telecom shift.
Consolidation of players:
Airtel acquired Telenor to synergies its operations and expand its presence in at least 7
circles. It has added 52 million subscribers from Telenor and will be aggressively positioning
itself in 1800 MHZ band in Andhra Pradesh, Maharashtra, Bihar, Gujarat among other
circles.
Vodafone-Idea merger, Vodafone will hold 45 percent in the combined entity, Idea
promoters 26 percent, and the rest by the public. Now, the biggest telecom company with
consolidated revenues of Rs 80,000 cr.
BSNL-MTNL merger, BSNL has pan india presence and MTNL operating only in cities.
Both being a PSU companies speculations are they will merge soon.
Per the recent GSMA report, telecom industry employees 2.2 million people directly and
consolidation in the sector could lead to up to 30 percent job losses in the next 12-18 months.
Employees are more focused towards uncertainty. However, the industry is also growing at
the rate of 5.2 percent CARG and is expected to touch 37 Billion USD by end of 2017-18.
As per the graph above, Jio pricing strategies with customers signing up till March given a
choice of unlimited data and free voice service for a year at Rs 303 per month by becoming a
prime member at the upfront one-time cost of Rs 99. These pricing strategies will lead to
increase in the subscribers.
http://www.ril.com/OurBusinesses/Jio.aspx
http://www.trai.gov.in/
http://trak.in/Tags/Business/category/telecom/
https://en.wikipedia.org/wiki/Mobile_network_operators_of_India
http://www.moneycontrol.com/