HomeNewsJio effect: Could this be endgame for BSNL, MTNL and other smaller...

Jio effect: Could this be endgame for BSNL, MTNL and other smaller telcos?

Already buffeted by the severe competition and expensive spectrum, Jio's pricing strategy might have no counters from the financially strapped government monoliths, and smaller private operators.

The era of paid voice calling is over – when these words were spoken by Mukesh Ambani, the richest Indian, at a packed shareholder meeting of RIL, a chill might have gone down the spine of many heads of rival telcos. In all likelihood, Mr Ambani has perhaps announced a death sentence or relegation to a zombie existence for many an operator like BSNL, MTNL, Uninor, Tata Docomo etc.

Airtel, Vodafone and Idea – the top three telecom operators – might just survive the current Jio Tsunami owing to their relatively deep pockets but it is very difficult to imagine other operators Riding this out without some extraordinary amount of fresh capital and or regulatory intervention.
Jio effect
Currently, Bharti Airtel has close to 1/4th of market share while Vodafone has about 19 percent share and Idea has about 17 per cent share. The rest is divided among nine telecom operators, most of which are struggling for some time with low revenue and decreasing subscriber base.

However, keep it in mind that even Reliance Jio will have a tough time to create a vast infrastructure like BSNL to cover the whole of India. However, that cannot be said about MTNL which is performing quite badly in recent times. A visit to some of MTNL’s regional offices will in fact make you wonder if the company is a going concern at all, if the filth and general air of decay is considered. For the smaller telecom operators who have been surviving on their wits and careful capital spending, this could be a body blow.

Ironically, Mukesh Ambani while revealing Jio’s tariffs said that the increasing competition will bring the best out of the players.

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