Telco Playbook: Jio Platforms Limited

Jio Platforms has come a long way since its inception. It launched its own greenfield 4G operation in late 2016 and used aggressive pricing and careful planning to go from zero subscribers to 398 million in less than 4 years. The company has now set its eyes on the digital space. This journey was not easy for the company though. Despite owning spectrum assets in 2010, Jio Platforms took almost six years to launch 4G, due to lack of compatible  handsets and RoW issues in laying out fiber. In 2016, it launched its VoLTE services with its own branded handset (LYF). Jio Platforms’ entry into the market triggered an industry wide consolidation as smaller telcos failed to battle Jio Platforms’ onslaught. The financial stress in the sector was first felt when Vodafone merged its operations with Idea. The merged entity (VIL) was further burdened with AGR related payments, leaving the company in shatters. The future for VIL looks bleak and its exit is a possibility. This would leave the sector with just two private players and BSNL, rendering Jio Platforms even stronger.

In Reliance Industries’ (RIL) recently concluded annual meeting, the parent group’s Chairman took the world by surprise with his statement that Jio Platforms has “designed and developed a complete 5G solution from scratch”. This comes amid reports of the government’s plan to ban Chinese vendors from the market. The news will be a big boost to the government’s “Make in India” campaign which promotes locally built telecom gear. So far, local vendors/suppliers like ITI and Tejas Networks were ignored as the bulk of the vendor contracts were given to foreign makers who supply mobile base stations, transmission equipment, and data/IP gear. Now this may change. For instance, state-owned gear manufacturer, ITI Limited, and system integrator, Tech Mahindra, are already bidding to supply state-owned BSNL with 4G infrastructure. Jio Platforms might take this as a cue and tie up with similar such local vendors and system integrators for building its 5G network. Further, Jio Platforms might find solutions for its 5G network in the form of OpenRan technology and its in-house vRAN specialist Radisys. However, stepping into the vendor space and competing with Ericson, Nokia and Huawei who own 5G patents and have many years of R&D experience will be an uphill task for Jio Platforms.

Below are a few highlights from the report:

• With RIL’s oil and petroleum business struggling, the group’s shift towards digital technology is becoming more pronounced. The revenue share of the digital business to RIL grew from 0.2% in 1Q17 to over 19% in 2Q20.
• To date, Jio Platforms has sold stakes in 14 deals totaling over $15B. The Covid-19 pandemic has been a catalyst for digitalization as people increasingly switch to online platforms, which elevated interest in Jio Platforms.
• Jio Platforms continues to outpace its rivals with net adds of 17.5M in 1Q20 (vs. 4Q19). In comparison, Vodafone Idea Limited (VIL)) and Airtel’s net adds in 1Q20 were -13M and +1M. Most recently, Jio Platforms recorded net adds of 10.8M in 2Q20 (vs. 1Q20). In comparison, Airtel lost more than 4M customers in the same period*.

*VIL did not report its 2Q20 filing at the time of publishing this report

Format: PDF (PPT available upon request)

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This report is part of MTN Consulting’s Telco Playbook series. This report was prepared as part of MTN Consulting’s Global Network Infrastructure tracker. Our GNI tracker covers three primary types of network operators: telecommunications, carrier-neutral, and webscale. This report considers Jio Platforms Limited, a telecom network operator (TNO). The quantitative analysis in this report is based upon our recently published “Telecom Network Operators: 1Q20 Market Review.”

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