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Sunil Mittal believes Reliance Jio Infocomm will bring lower prices and further consolidation as market shrinks to five operators.
The arrival of Reliance Jio Infocomm into the Indian mobile market later this year will force existing operators to cut their prices, Sunil Mittal warned this week.
Mittal, chairman and founder of Bharti Enterprises and its flagship telecoms arm Bharti Airtel, India’s largest mobile operator by subscribers, believes Reliance Jio will offer low-priced devices in order to win customers, forcing big players like his own company and number two operator Vodafone to respond in kind, the Financial Times reported on Thursday.
The executive admitted he is "concerned" about the newcomer, describing Mukesh Ambani’s Reliance Jio as "formidable competition."
But while India’s big guns are worried about the impact on profitability from a new cut-price rival, there could be an upside too; Mittal sees Reliance Jio’s arrival as a potential trigger for further consolidation, leaving a handful of big players to serve India’s vast mobile base.
Mittal predicts that India will end up with five mobile operators, four private operators in Bharti Airtel, Vodafone, Reliance Jio and Idea Cellular, plus state-owned BSNL.
As it stands, the market is served by a dozen operators, which together claimed 1.01 billion mobile customers at the end of last year, according to the Telecom Regulatory Authority of India (TRAI).
However, only the top three – Bharti, Vodafone and Idea – had market shares in excess of 10%, the regulator’s figures show.
Nonetheless, India’s mid-sized mobile operators have not yet given up. Reliance Communications, owned by Anil Ambani, brother of Mukesh, is in the process of taking over smaller operator Sistem Shyam Teleservices (SSTL) and this week its shareholders voted in favour of the deal. It is also working on a possible 50:50 joint venture with Aircel. The three operators together claimed more than 19% of the market at end-2015.
