Jio creates the world’s biggest mobile revolution in India

Mukesh Ambani, India’s richest man, has spent £25bn building up his telecoms company Reliance Jio – the biggest private sector investment with over 200m Indian phone users taking advantage of the competition, as he fights for dominance in the second-largest telecoms market by user numbers.

Most of the money was spent by giving away free access for the first time in India by JIo which in Hindi means to live, and according to Jio I snow the world’s largest mobile data network, with its clients consuming about three times the amount of data of an average European customer.

Millions of Indians are able to access the internet to register for benefit payments, download school books or watch cricket matches or Bollywood and Hollywood movies.

The rapid growth in the mobile network has encouraged leading retail and technology companies to invest enough money into the country including Walmart who bought 77 per cent of Indian online retailer Flipkart for £12.32 bn, Google beefing up Indian staff, Netflix wants to add 100m new customers, Amazon want to capitalise mobile online retail market.

By giving free access Jio effectively killed all competition and Narendra Modi’s promise of a level playing field for business is far from it.

In June 2010, the government did an auction for part of the telecom spectrum. The bandwidth being sold was not very attractive to most of the companies so they were surprised when Infotel Broadband Services emerged victorious having bid Rs128bn then worth £2bn- 5,000 times the company’s own net growth. Infotel was bought by Reliance Industries after the auction was closed and Jio’s rivals were outsmarted. In2013,  at the request of the government  the telecom regulator  announced that all licenses  should now allow companies to transmit both data and voice calls. Mr Ambani agreed to pay  Rs 16.6bn to convert the licence with a migaration fee.

“Jio was providing telecom services below its average variable cost with the sole intention of eliminating competition” according to Bharti Airtel India’s biggest telecom company by subscribers.

Jio’s been profitable for the past three quarters, making Rs6.1bn in net profit in the three months to July. Many believe if Jio can keep prices lower than its rivals for a long time, he will be able to increase the market share before having the option to raise prices from market dominance.