Tuesday, 4 October 2016

Reliance Jio business model explained

With each day passing by Technology is transforming the world with the help of the internet. Connecting people through the internet have proved to be much easier than ever before. Many initiatives were started by telecom industries in the past to connect more people to the internet. One of the hot and trending topic in Indian Newspaper these days is the launch of Jio Sim.

Telecom is also a very lucrative business so it is important to understand how are they offering 4G data at such cheap rates?

Future lies in using data on your mobile phones. Hence, the smartest move now is to invest into building your infrastructure for the future- that’s what the clever businessman- Mukesh Ambani did by introducing Jio 4G LTE Network in India. Surprisingly, Most of you are going to pay the same or probably more money to Jio compared to your current network provider.

yeah..!!! It's true..!!

Although Jio sim’s tariff plans may look unbelievably awesome, but they will make more money by giving free voice calls than what the other companies make by charging you for it! As per the data, In India, the monthly average revenue per user (ARPU) the current network providers get is around Rs 150 per month. That is the money they get on average from each user that means if you spend over Rs 250 per month, you are considered a high-value customer. So If you are using over Rs 150 worth of voice calls every month then it is a totally awesome plan for you. But the point is that other telecom companies make about Rs 150 per month on average from each user by charging for voice, SMS, data, and roaming. Jio will be making the same/more amount of money on average from each user even after providing SMS, roaming and voice calls for free, by “just pricing things differently.”

click to expand
Now, Did you notice that there is no plan in-between the Rs 149 and Rs 499 plans? This is basically a psychological trick to get you into the Rs 499 plan. They do have some smaller plans at Rs 19, 199 and 299, but these plans do not really offer any more value than their core plans as they have even less validity. Also, it offers less data per rupee. For example, the Rs 299 plan only offers 21-day validity and 2GB data. Now, again see that if you want to really use more than 4GB of 4G, then you have to spend double and move to the Rs 999 plan. Did you notice that there is nothing in-between?

Also, notice that all these plans are for 28 days which can easily be perceived as ‘a month’ by most people. If we divide the number of days in a year with 28, we will realize that we are paying for 13 ‘billable months’ in a year. Jio came up with this Rs 50 per GB rate by adding the wifi-access you are getting, but it is not feasible for most people to utilize this as wifi hotspots are not available everywhere. It would be useful for you if there is a wifi hotspot near your house, at your workplace or your college.

That’s fine. It’s a great business and fits strategically well for Reliance at this time, but also it is great for the country.

Written by Deepak Sharma
An ambivert by nature and a keen business editorial reader. I believe - "Either write something worth reading or do something worth writing"

Back To Top
For Editorial Submissions, Business Inquiries or any other query, do write to us at

Copyright © 2017    ReviewMantra |  Terms of use  |  Privacy