OBJECTIVE OF THE ANALYSIS –

Major objective of carrying out this analysis is to understand the microeconomic factors
affecting the mobile operators in telecommunication industry of India. The study hence tries to
take into account the impact this industry has on the lives of consumers, firms, regulator and
vice a versa.
The analysis tries to study the nature of this industry on the basis of competition in the industry
and give critical analysis as to why is it a glaring example of oligopoly. The analysis also tries to
address questions regarding demand supply trends and pricing mechanism observed in this
industry and the rationale behind the same. The study also considers major players of the
industry and the kind of presence They have in the industry. Finally, the study attempts to
understand how these firms function and coexist, while at the same time making normal profits
and a radical change brought about in the sector by a new player and various government
regulations.

RANDOM –

The nature of telecommunication industry is characterized by fixed and sunk costs. A very high
percentage of total costs are fixed. These costs include purchase of spectrum, ownership of
license and cost of towers. Telecom operators usually partner with telecom infrastructure
providers to lease towers. All these fixed costs act as a barrier for new entrants. Telecom is
probably the only infrastructure industry which has very little variable cost. Therefore, it is safe
to infer that the marginal cost (MC) for these companies is miniscule. To curb costs and focus
on core operations, telecom companies have been segregating their tower assets into separate
companies. Creating separate tower companies has helped telecom companies lower operating
cost and improve capital structure; this has also provided an additional revenue stream.
Consolidation and mergers, investment in technology and emergence of tower industries has
helped bring down the average cost curve. This gives the cushion to operators to further reduce
the prices.

JIO OVERVIEW –

Prior to three years of its start, Reliance Jio has come to transform the telecom sector of India.
Market expanded 6X with introduction of Jio in less than 6 months of its initiation. Its current
subscriber base extends to 331.3 million users, surpassing Vodafone Idea which has reported a
decline in its user base to 320 million in June 2019.
According to the data from June Reliance Jio has a consumer base of 331.3 million users.
RIL Jio follows a different depreciation policy that causes its charges to be lower than those of
its peers. Moreover, the company capitalizes its expense since a lot of its services are yet to be
commercialized.
Jio continued its robust growth momentum during FY 2018-19. Digital Services business
revenue grew by 94.5% to `46,506 crore and EBIT grew by 176.7% to `8,784 crore. This was
driven by strong adoption of Jio services, reflected in strong subscriber addition and usage
metrics on data and voice. Reliance Jio added 120.1 million subscribers during the year, taking
total subscriber base to 306.7 million.

Jio is now India’s largest mobile telecom operator ranked by Adjusted Gross Revenue (AGR). Jio
leads the Industry in terms of Average Revenue Per User (ARPU) (`126.2/ month), with healthy
average voice consumption (823 minutes per user per month) and average data consumption
10.9 GB per user per month.