Reliance Jio Profitability: Is it a Riddle or a well thought out ‘Valuation Game’
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In September, during the Reliance AGM meeting, Mr Mukesh Dhirubhai Ambani announced the launch date and tariffs of the much awaited Reliance Jio. The announcement created ripples across the financial and telecom world. Idea cellular and Bharti stocks dipped by 10.5% and 6.4% respectively. The Twitter, Whatsapp and Facebook chatterati was abuzz with the low data tariffs and free voice minutes.
After the launch announcement, many analysts have raised issues over the profitability of Reliance JIO operations and the stock market also punished Reliance stock by dropping it by 2.73%. But is it actually the case. Is Mr Ambani so naïve or an altruist that he will take a decision to distribute his hard earned dollars without having profitability in sight?
Much has been said about tariffs and if we compare the tariffs , then it is definitely lower than the current tariffs of existing Telecom service providers (TSP) but Reliance Jio is targeting higher ARPU customers. The EBIDTA of existing TSP’s is in the range of 32.4% to 37.4% which clearly shows that even if Reliance Jio takes a hit due to the discounted tariffs, it will ensure that they cover their operational cost.
The big point which is being missed is the digital ecosystem which Reliance is creating around their basic data services. We have seen massive enterprises being carved out of digital ecosystem such as Facebook, Twitter, Google, Amazon, etc having huge valuations. Reliance has launched multiple apps and has already seen downloads in the range of 5 MN and above for these apps.
Comparison of Apps launched by Reliance Jio:
*Valuations taken from various internet portals
The example of developed countries proves, that as the internet/ smartphone penetration grows, the download and usage of apps also increases. Reliance Jio will create a huge retail channel to penetrate the market. It has already launched LYF smartphone and the market is growing at a CAGR of 50% since last two years. These two factors will further help it increase number of downloads/usage. So it’s a matter of time when these downloads will be in multi-millions thus bringing in millions of DAUs/ Billion page views/ Trillion messages. Considering the valuations of the competing apps and if Reliance Jio comes anywhere close to them then the valuation of Reliance Jio will be much more than what they have actually spent.
Apart from these apps its products/ services around Enterprises, Analytics, SwitchnWalk etc can be other valuation boosters.
Finally, the long term impact will depend on Reliance Jio managing the service quality which will help fulfill the Indian digital dream and make sense of huge costs incurred on the roll-out.
Kavinder Pawahanee
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@panchabhut wrote:
Jio is looking to create an ecosystem. It already has Network18 under its control to create content. It aims to take over as a multiplay service provider. It expects the customer to replace DTH/Cable connection, mobile connection, data connection, corporate telecon etc and move to Jio as a single service provider. Once data network is deployed, the incremental cost of data is negligible. So, when a customer opts for all services, the ARPU becomes higher with little extra cost.
they own network18 not got profit it is more like keeping the media under their control to make sure they don’t criticing about reliance. did you hear any wrong doing or controversy about reliance after they brought Network18 
Why is Reliance Jio charging only for data and giving voice free ?
There is a technical explanation to it.
Jio has only 4G capability and no 3G or 2G. Other existing operators have all the three.
The existing operators transmit voice over 2G and 3G and 4G is used only for Internet data. But on the other hand Jio uses a technology called VoLTE where even the voice is transmitted as data packets over the 4G network.
Please note this is different from mobile data which is only for mobile internet. Technically this transmission of voice through 4G is called Packet switching. Means packet switching is different from Mobile data which is only for mobile internet. This is the reason why even if one switches off mobile data in a Jio connection, calls are placed.
If your phone is not VoLTE enabled you will be able to make Calls only if you download the Jio app.
While the Jio technology is superior and latest, a Jio user ends up using huge additional data for every voice call he makes.
Thus in Jio one uses data for voice and Internet.
So when you are on the Jio network be prepared to consume high amounts of data and this is precisely Jio’s catch and that is why Jio charges for only data.
Another piece of interesting information.
Wow, the whole country is excited listening to news about Reliance JIO and their 4G LTE data plans. But, before you dump your existing operator or connection for Reliance 4G LTE, you need to understand whether there is really any benefit. Let me talk about the Rs.499/- plan as most of us may prefer that.
Reliance Jio is giving 4GB of data on the Rs.499/- Plan. The Reliance JIO uses VoLTE (Voice over LTE) Network. VoLTE stands for Voice over LTE, by which you make voice calls over the data network. So that effectively means all the outgoing and incoming calls are going to consume data from that free 4GB. So, you may think how much data may get consumed for every call.
Let’s take WhatsApp call as a benchmark. For every WhatsApp call on 4G LTE, data consumption can be about 780 KB for a minute (various sites have reported it after thorough testing). So, a user on a 4 GB monthly plan will have a total of 5,128 minutes or about 84 hours of WhatsApp calls. Now, replace the word WhatsApp with regular calls each month. Remember that this is for both incoming and outgoing calls. If you make or receive a call, the data meter starts ticking and you may be talking for hours thinking it is FREE but it’s not. Reliance says “Unlimited 4G at night” and you may again think that you can browse or talk for hours from 9:00 PM to 6:00 AM. But that’s not correct, the night as per Reliance is from 2:00 AM to 5:00 AM. If you want to be awake that time to utilize the free data, Good Luck with that. I’m just talking about calls here and usage of FB, YouTube, Twitter, other apps that use Internet are not considered.
So what about regular operators? These operators (Airtel, Vodaphone, Idea etc) use 4G for data and 2G or 3G for voice calls. When you make or receive a call, it does not consume regular data. On the top of it, they have 4G speeds for your browsing or WhatsApp calling. With these regular operators, you will at least be peaceful that you are not consuming data when talking on phone. Think before switching. The Grass always looks
Greener on the other side.
@Alpha.Barood
I remember reading one article targetted towards US AT&T VOLTE service and according to that, with 2GB data plan we can get 5000min of voice calls
If this is true and applies to Reliance Jio, i dont think most of them would consume 1GB of data for voice calls
Even by this logic, 5128mins for 500 is <10p per min. much better than airtel
@geturchiru wrote:
Even by this logic, 5128mins for 500 is <10p per min. much better than airtel
Read the TnC first. For voice cal data cannot be charged.
Terms and conditions
1. Voice is truly free – no charge towards voice or the data used to make 4G voice calls.
@saravananbaskaran wrote:we can’t trust Jio
@geturchiru wrote:
Even by this logic, 5128mins for 500 is <10p per min. much better than airtel
Read the TnC first. For voice cal data cannot be charged.
Terms and conditions
1. Voice is truly free – no charge towards voice or the data used to make 4G voice calls.
After December they will again change t n cIn US, almost all carries charge data for voice calls
@geturchiru wrote:
Even by this logic, 5128mins for 500 is <10p per min. much better than airtel
yeah but what about data usage for internet ?
If you are accustomed to too much calling then you may have to sacrifice with Internet data usage if they starts charging data for voice calls
@getready wrote:
@saravananbaskaran wrote:we can’t trust Jio
@geturchiru wrote:
Even by this logic, 5128mins for 500 is <10p per min. much better than airtel
Read the TnC first. For voice cal data cannot be charged.
Terms and conditions
1. Voice is truly free – no charge towards voice or the data used to make 4G voice calls.
In US, almost all carries charge data for voice calls
They may change the TnC according to the usage of users.
There is lot of catches in the actual offer after 1st january 2017. But until that we can utilize the free data for 3 months. Getting the Sim is another matter altogether. They are already selling it for 1000rs in mumbai. If you go through the plans in JIO post paid carefully you will notice that there is not in between plan that almost 60% of the people use. There is no plan after 149 until 499 after that next one is 999. They are cleverly forcing people to choose 499 or 999 with no in between plans for casual browsing and calling that most people will do. If you get a jio sim now then use it free for 3 months and once it kicks off in 2017 then decide whether to actually change permanently or not.
@getready wrote:
@geturchiru wrote:
Even by this logic, 5128mins for 500 is <10p per min. much better than airtelyeah but what about data usage for internet ?
If you are accustomed to too much calling then you may have to sacrifice with Internet data usage if they starts charging data for voice calls
You can go with data top up whenever you’ve exhausted your data. Instead of balance in Rs. its balance in MB. You can use it the way you want for voice/browse/sms and I don’t see any problem here.
@geturchiru wrote:
@getready wrote:
@geturchiru wrote:
Even by this logic, 5128mins for 500 is <10p per min. much better than airtelyeah but what about data usage for internet ?
If you are accustomed to too much calling then you may have to sacrifice with Internet data usage if they starts charging data for voice calls
You can go with data top up whenever you’ve exhausted your data. Instead of balance in Rs. its balance in MB. You can use it the way you want for voice/browse/sms and I don’t see any problem here.
0.3GB for 149 
@getready wrote:
@geturchiru wrote:
@getready wrote:
@geturchiru wrote:
Even by this logic, 5128mins for 500 is <10p per min. much better than airtelyeah but what about data usage for internet ?
If you are accustomed to too much calling then you may have to sacrifice with Internet data usage if they starts charging data for voice calls
You can go with data top up whenever you’ve exhausted your data. Instead of balance in Rs. its balance in MB. You can use it the way you want for voice/browse/sms and I don’t see any problem here.
0.3GB for 149
No this one. 1GB for Rs. 151 https://reliance.ssl.cdn.sdlmedia.com/49...df
or you can maintain your balance in Rs and charged at 250/GB too with this.
https://reliance.ssl.cdn.sdlmedia.com/49...df
The one you mentioned gives validity of 28days too.
So, here is the deal. Recharge with 499 evert 28 days. You get 4GB data(use for whatever you want). Once exhausted, use either data top-up from 151 onwards or use regular recharge and pay by usage at 250/GB rate
Hilarious …on how ‘budget airlines’ work and what happens when it is given back to them ! 😜
Spare a thought for poor ole Michael O’Leary, Chief Executive of Ryanair.
After checking in a hotel in Manchester, he went to the bar and asked for a pint of Guinness.
The barman nodded and said, “That will be £1 please, Mr. O’Leary.”
Somewhat taken aback, O’Leary replied, “That’s very cheap,” and handed over his money.
“Well, we do try to stay ahead of the competition”, said the barman. “And we are serving free pints every Wednesday from 6pm until 8pm. We have the cheapest beer in England”.
“That is remarkable”, Michael comments.
“I see you don’t have a glass, so you’ll probably need one. That will be £3 please.”
O’Leary scowled, but paid up.
He took his drink and walked towards a seat. “Ah, you want to sit down?” enquired the barman. “That’ll be an extra £2. You could have pre-booked the seat, and it would have only cost you £1.”
“I think you may to be too big for the seat sir, can I ask you to sit in this frame please”.
Michael attempts to sit down but the frame is too small and when he can’t squeeze in he complains “Nobody would fit in that little frame”. “I’m afraid if you can’t fit in the frame you’ll have to pay an extra surcharge of £4 for a bigger seat”.
O’Leary swore to himself, but paid up. “I see that you have brought your laptop” added the barman. “And since that wasn’t pre-booked either, that will be another £3.”
O’Leary was so incensed that he walked back to the bar, slammed his drink on the counter, and yelled, “This is ridiculous, I want to speak to the manager”. “I see you want to use the counter,” says the barman, “that will be £2 please.”
O’Leary’s face was red with rage. “Do you know who I am?” “Of course I do Mr. O’Leary.”
“I’ve had enough! What sort of Hotel is this? I come in for a quiet drink and you treat me like this. I insist on speaking to the manager!” “Here is his E-mail address, or if you wish, you can contact him between 9.00 am and 9.02 am every morning, Monday to Tuesday at this free phone number. Calls are free, until they are answered, then there is a talking charge of only £1 per second, or part thereof”.
“I will never use this bar again”.
“OK sir, but remember, we are the only hotel in England selling pints for £1.🍺🍺
PS: I think Reliance ‘JIO’ is heading for the same….!!
![Samsung Galaxy S23 [8 GB / 128 GB] @ 52999 & 256 GB @ 57999](https://cdn0.desidime.com/topics/photos/1776021/medium/3.jpg?1713266216)
Jio is looking to create an ecosystem. It already has Network18 under its control to create content. It aims to take over as a multiplay service provider. It expects the customer to replace DTH/Cable connection, mobile connection, data connection, corporate telecon etc and move to Jio as a single service provider. Once data network is deployed, the incremental cost of data is negligible. So, when a customer opts for all services, the ARPU becomes higher with little extra cost.