Reliance Jio's cheap offers deeply affect telecom industry

The whole perspective of utilising mobile data changed after September 2016 when Reliance launched its telecom service Jio. The amount of data users would get for a month for a particular price, they started getting the same on a daily basis, for minimal costs (no cost in the initial months). However, other mobile service providers faced an intense brunt due to Jio and they still continue to do so.

The second quarter of 2018 had been a tough period for the whole telecommunication industry as the profits continue to represent a serious downfall, as per the report released by TRAI (Telecom Regulatory Authority of India).

As per a report published by Livemint which is obtained from Kotak Institutional Equities, the collective expense of customers drastically fell from Rs 44,700 crore in June 2016 quarter to Rs 29,800 crore in March 2018 quarter. All of that accounts for total 33 per cent of expenditure dwindle on data services from the customer's side in India.

Apart from the telecom companies, others who seem to face the negative impact are the linked banks and the government. The 12 per cent tax which the companies pay from the accumulated revenue has now considerably curbed which has been affecting the collection of taxes.

Reliance Jio offered its services for free in the initial months of its launch. However, the charges it started to demand from the customers later were still minimal which made little difference in Jio's customer base. Moreover, it also launched its phone to offer affordable telecom services along with WiFi dongle which asks for a competitive price.