Mukesh Ambani’s speech costs Indian telecos over INR130 billion

Shares of Bharti Airtel, Idea Cellular and Reliance Communications nosedive as Reliance Jio announces data tariff

A 45-minute speech by Mukesh Ambani, the chairman of Reliance Industries — an Indian conglomerate holding company, announcing free voice services to its users cost the country’s three existing operators an estimated INR131.66 billion on Thursday.

Shares of active telecom operators Bharti Airtel, Idea Cellular and Reliance Communications nosedived up to nine per cent as Ambani’s Reliance Jio priced data tariff for its services at as low as INR50/GB, kicking off a tariff war in the country, The Economic Times reported.

Shares of Bharti Airtel dropped 6.37 per cent to settle at INR310.70 on Bombay Stock Exchange. Idea Cellular plunged 10.48 per cent to INR83.70, while Reliance Communication slid 8.81 per cent to INR49.15.



“All voice calls for Jio customers will be absolutely free,” the chairman revealed in his speech, adding the roaming charges will be zero. In addition to this the company will also offer data at INR50 per GB (base rate) against current rate of INR250/GB charged by peers with at least 10 plans.

“We have price points starting from INR19 for the occasional data user, to a monthly rate of INR149 plan for the light data user and all the way up to a monthly INR4,999 plan for the heaviest data user,” Ambani further revealed.

In March this year, Reliance Jio Infocomm had claimed that it would be the world’s biggest startup with an investment of INR1,500 billion. It is believed that the company’s subscriber base has already swelled to 25 million users during trials.

Ambani said the telecommunication operator plans to cover 90 per cent of India's population by March, 2017. “The company will introduce 4G handsets priced as low as INR2,999.” At present, its network covers 18,000 cities and 200,000 villages. A set of apps that Jio offers will be free for active subscribers till December, 2017, he said.



Incumbent players were tightening their belts and had announced various schemes to retain existing subscribers. “We continue to remain cautious on the sector in the light of the twin risks of Jio's impending launch and the upcoming spectrum auction,” Credit Suisse said in a note.

Goldman Sachs said the response to the new entrant has been positive, with long queues in company stores. “We expect Jio to garner 35 million subscribers over the next two years, with data volume growth for incumbents slowing to 50 per cent in FY17 from 70 per cent in FY16,” it said.

This article originally appeared on The Economic Times.