Reliance Jio Free Prime Membership Offer: The Result of Declining Growth?

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Neeraj Mhttp://dazeinfo.com
I am a full-time Industry Analyst, covering mobile industry, writing about the giants and their growth performances, chasing the statistics like my dreams, and digging deep into the industry till I get a gold mine. 'Earned' my Masters in BioTech quite recently and giving wings to my thoughts without drinking RedBull.

The intensifying competition among Indian telco players is far from over. In a recent development, Reliance Jio has announced to extend the annual PRIME membership to its users for another year without any charges. The benefit, however, is applicable only for users who subscribed to the exclusive Prime membership before 31 March 2018. All new users, subscribing to Prime membership from April 1, 2018, will have to pay Rs 99/- during onboarding the network.

The number of Reliance Jio users has reached to 175 million by the end of March 2018. In less than two years of its debut, the phenomenal growth of Reliance Jio is no less than a surprise. With 14.62% share of total mobile subscribers in India, Reliance Jio has become the fourth largest player in the mobile industry by the end of January 2018.

Why Is Reliance Jio Offering Free Prime Membership?

Analysts believe that free extension of Prime membership will help Reliance Jio to strengthen its market presence. Apparently, the company doesn’t want to see any of its existing customers leaving due to the renewal charges, therefore by offering the Prime membership to all of its customers for free, Reliance Jio would be able to keep its user base intact. Besides, the falling prices of data and tariffs of competitors, likes of Airtel, is another major reason behind Reliance Jio’s free Prime membership offering.

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The advent of Reliance Jio in India has pushed the market for correction and consolidation. While BSNL, Airtel, Vodafone has started revisiting their pricing strategy, Aircel, Idea, Telenor, Tata and many other small players have either wind up their operations or are proactively looking to merge with bigwigs of the industry.

Besides, all the big players, especially Airtel, have also started to upgrade their existing network infrastructure to compete with the future-ready Reliance Jio network, which has so far provided an edge to Reliance Jio over other players. Airtel has already started offering its VoLTE (Voice over LTE) services in few of the states. The company has planned to roll out its VoLTE services to all the states to compete with Reliance Jio which has redefined the complete telecom industry by offering unlimited calls, bundled with high-speed data, at the jaw-dropping price.

Reliance Jio Facing Heat On The Level Playing Field

As the dust has started settling down, Reliance Jio, which was so far growing leaps and bounds in the absence of any competition, is now under pressure to meet the quality level of Airtel and Vodafone. Airtel and Vodafone are leaving no stone unturned to set up a level playing field in the telecom sector, be it technology or the price.

The market corrections have fueled the competition in the market and Reliance Jio is finding itself under pressure to maintain the growth rate. As the market is fast turning towards VoLTE, the availability of VoLTE enabled devices and increasing data consumption has resulted in the cut-throat competition among all the telecom players. Out of 1.15 billion mobile subscribers in India, only 359.8 million are broadband users. Therefore, nearly 67% of mobile subscribers are yet to become a part of the ongoing data war among telecom companies in India. Undoubtedly, the future belongs to the high-speed mobile data, aka mobile broadband, every player has set its eye on lion’s share of the market. The unprecedented growth of Reliance Jio in the mobile broadband segment has helped the company to take a sizable lead with other competitors. With 46.8% of mobile broadband market share, Reliance has firmly secured numero-uno position leaving Bharti Airtel, Vodafone far behind that have just 20.24% and 15.23%, respectively.

However, both Bharti Airtel and Vodafone have started catching fast. On the other hand, the month-over-month growth of Reliance Jio has started declining. Reliance Jio, which added 100 million users within 6 months of the launch, is able to add another 75 million in the subsequent 12 months. Reliance Jio is yet to win customers’ confidence to be worthy enough to replace Airtel or Vodafone as a primary mobile network provider. Various independent reports indicate that a sizable number of mobile subscribers are still using Reliance Jio as a secondary connection primary used for data access. Besides, the push from retailers towards selling Reliance SIM is also negligible due to the thin margins and users’ habit of recharging Jio connections online.

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In such circumstances squeezing existing userbase to make revenue books more satisfying is definitely not a good idea, especially when competitors are not making their users cough up extra money as a membership fee. The management of Reliance Jio has apparently understood it well, and that’s why the company has found to collect onboarding exclusive Prime membership fee from new customers a more convincing strategy than asking existing customer base to reach their pocket for a membership fee.

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