Analysis of Reliance JIO


In an interview a few years ago, Mukesh Ambani said, “Broadband and digital services will no longer be a luxury item, a scarce commodity to be rationed among a privileged few”.

Whether it was Ambani’s dream to take over the telecom industry and 4G space in India is unclear, but the fact remains that that is what has happened. From December 2015 when it was first launched, until 2020, the marketing and growth strategies employed by the management team at Jio have enabled this company to emerge with giant-like proportions and establish itself as a leader in the Indian telecom space.


Companies are not formed overnight; a lot of planning and preparation goes into the development of products and marketing strategies. However, with Jio, it seems as though it suddenly emerged out of nowhere. 

The truth of the matter is different, though. Reliance Jio Infocomm Limited was formed in 2007. In 2010, it acquired 95% of Infotel Broadband Services Limited. This lesser-known company was attractive because of the services and opportunities it offered in exchange for the price tag. IBSL is what allowed Reliance to develop its 4G network all over the country.

Reliance Jio’s first product was the Lyf smartphone which was launched in the Indian markets in 2015. This product, while hyped and advertised, did not really take to the masses, and failed to generate sufficient demand.

2016 brought Reliance Industries Limited’s 42 annual general meetings. It was here that Ambani first announced his plans to take over the 4G space in India, with the launch of the Reliance Jio. 

“By March 2017, we will cover 90% of India’s population. It will be the largest 4GE network today,” he said to his shareholders.

Following this announcement, Jio hit the markets in September 2016. 


The reasons behind Jio’s marketing strategy are based on a simple premise — free is always better.

For any newcomer, breaking into the telecom industry which is typically dominated by a few large companies, much like in an oligopoly structure, is difficult, to say the least. This is one of those industries where users are not very keen to shift from brand to brand. There are certain barriers to changing brands, namely, the mobile number, finding a suitable tariff plan, etc. While these issues can be solved, once you find a company which suits your needs, unless you find something that is drastically better, you would not want to shift.

The one thing that is unilaterally always better, is the same service being offered for free. Or in this case, Jio offered free 4G data to all its subscribers, which, in 2016, was a luxury commodity.

The initial scheme that accompanied the launch of Jio was free services till December 2016. Under this scheme, each individual was given access to free SIM cards and free 4G data to fulfil all their browsing needs. In fact, the free service was not only limited to 4G data; Jio also provided free voice-calling, both local and STD. This kind of scheme was previously unheard of and represented the Utopian mobile plan for every Indian.

This aggressive marketing scheme was in line with Ambani’s target was to reach 100 million subscribers in 100 days.

In December 2016, Jio announced that it would extend the premium free service till March 2017. Named as the “Happy New Year” plan, this extension made Jio the first telecom provider in the world to dish out six months of free service.


Reliance Jio reached its goal of 100 million subscribers in February 2017, after 170 days of existence. Since then, it has only grown bigger and bigger. By June 2017, the network had reached 200 million subscribers, thus making a record for the fastest growth of users. As of December 2019, Jio is the third-largest telecom service provider in the world and has a network of close to 400 million subscribers.


“If your guiding light is what the customer really wants, then you cannot be wrong.”

Before Jio came to the market, high-speed internet data was a luxury for the majority of Indians. On average, people paid between Rs. 200 and Rs. 500 for limited 3G mobile data. “Digital only” strategies were practically unthinkable.

Jio’s approach to this situation was two-fold. In order to answer a need that customers may not be aware of, you first need to provide a sample of what your solution is. This is the fastest and most reliable way of creating demand. Once customers are hooked, the chances of retaining them once you move to a paid model are much higher. In Jio’s case, there was an innate advantage. The product being introduced was not only free of all charge, but it also disrupted the entire telecom space in India and brought high-speed data to the general public. People were now streaming movies, watching videos, video-calling others, and much more, all from their mobile phones.

This trial period also serves as an opportunity for the company to test out their product, and then use the data from that period to optimise its network to the needs of the consumers. It serves as the equivalent of a clinical trial, only less intrusive. 

Jio moved to a paid model from April 2017. By this time, they had provided six months of free service and had successfully hooked their subscribers. The chances of retention were already high. If you add in the advantage of having disrupted the entire telecom industry in India, it will become apparent why Jio’s retention rate was through the roof. There was no other telecom service provider in India who could match Jio in terms of tariff and the uninterrupted supply of high-speed mobile data. Market leaders like Airtel and Vodafone lost out in this regard, and Jio triumphed.

It was also around this time that dual-SIM phones gained popularity. It became exceedingly easy for individuals to retain their Jio SIM cards and use them for mobile data while keeping their original phone numbers for other purposes. Between February 2017 and June 2017, Jio’s subscribers doubled in number.

Within a span of one year, the telecom industry in India started looking very different indeed. Jio’s focus was no longer restricted to only SIM cards. They brought out new products like 4G enabled phones, broadband services, television services, and many others. 

The strategy employed here is very shrewd. The idea is to first develop a core product or service, and convert customers. Then, you can start to roll out the other supplemental products which are based on that core service. In JIo’s case, the core product is the 4G network. The supplemental products like 4G enabled phones, smart televisions and others create tangential demand which is based on the original requirement for 4G data. This generates demand on different levels.


Generating demand and creating a customer base is the first step. Then comes the task of long-term retention. There are several ways of accomplishing this.

First is the bandwagon effect. If you see everybody around you wearing Converses, then it creates in you an unconscious desire to fit in and wear Converses. Thus, you start desiring Converses. For Jio, the referral stage was particularly important as other telecom service providers had not caught up with a 4G network of that magnitude. With coverage in all 22 telecom circles, Jio became the largest mobile network operator in India by 2019.


In the financial year 2019-20 alone, profits have increased by 88%. Revenue increased by approximately 40%, and EBIT rose by 64%. In fact, during the coronavirus pandemic, Jio reported that data usage on their network increased by over 50%.

Second is the timely launch of new products to keep your customers’ attention. The original 4G LTE service was launched in September 2016, along with the Jio music app, video streaming app and other accompaniments. The JioPhone was launched in August 2017, with subsequent models being introduced in 2018, and in 2020. These phones are created to answer the complementary demand for affordable 4G compatible phones, generated by the original demand for 4G data. For the manufacture of these phones, Jio has partnered with Google. Apart from this, the company has also launched Wifi routers and other electronics.

Since its introduction in 2016, Jio has introduced at least one new product every year to keep their customers hooked, and to maintain a consistent growth rate in their base of subscribers. Most of the products launched are based on 4G, their original product, and span out from there.


Most of the companies we see around us function on debt. They obtain external capital from banks or other investors, use that capital to fund their production activities, wait for the revenue to start flowing in and then repay the initial credit that had been taken. The reason why companies function in this manner is that their main source of income, the revenue, comes after the product has been created and is ready for consumption.

Now, although this is the prevalent practice, having a large debt burden imposes an ever-present strain on the company’s balance sheet, and brings down the debt-to-equity ratio and others. For larger companies who have a steady and consistently increasing stream of revenue, they try to keep the debt as low as possible and instead, use retained earnings and shareholders’ equity to finance their production activities.

Non-current debt liabilities also pose as a hindrance to the company’s earnings per share and the profit left over after payment of interest and tax, as non-current debt has to serviced in the form of regular interest payments.

Overall, a debt-free company is more reliable, self-sufficient and presents itself as a safe and sustainable bet to investors. If it was easier to become debt-free, I doubt any company in the world would choose to keep a positive level of debt.

There are a few other reasons which are specific to Reliance Jio as a subsidiary of Reliance Industries, and as a participant in the Indian telecom space. 

For starters, in industries like telecom, there is an initial investment in the creation of the network infrastructure. According to Ambani, to get Jio off the ground and into the atmosphere, it took an approximate amount of 150,000 crores. This, of course, includes the amount spent on the acquisition of Infotel, as well as the subsequent investments to develop the optical fibre network in India. Much of this initial investment was diverted from the parent company, RIL.

Apart from that, there is also a growing saturation in the petrochemical industry. History has always been a testament to the fact that entrepreneurs who enjoyed long-term success were the ones who were blessed with the gift of foresight. Ambani realised that there is little scope for new growth in the refinery and petrochemical business, which, so far, has been the primary driver of RIL’s revenue stream. With impending saturation, one has to look for new opportunities elsewhere, which is part of the reason why Ambani is now focussing so strongly on the growth of Jio. Part of the reason why he wants to make RIL debt-free is to remove any external stress from his potential star. 

At the beginning of 2020, RIL’s net debt amount stood at 1.61 lakh crores. Over the past decade, Reliance’s debt burden increased by 420%, and interest payments increased by 691%, while the profit earned increased by only 63%.



At the annual general meeting in August 2019, Mukesh Ambani announced his plans to make Reliance completely debt-free by March 2021. He achieved this target in a span of 9 weeks, amidst the coronavirus led pandemic. 

“I have fulfilled my promise to the shareholders by making Reliance net debt-free much before our original schedule of 31 March 2021,” said Ambani.


Funds have been raised through two sources. The first is a rights issue, which means a subsequent offering of shares to the existing shareholders at a discounted price. Similar to an FPO, a rights issue only focus on existing shareholders, as opposed to the general listing of more shares for anybody.

The Reliance rights issue was oversubscribed by 1.59 times and raised more than 53 thousand crores for the company.

Apart from this, the majority of funds came from the sale of stakes in the Reliance Jio platform. A total of 24.7% of Jio has been sold to external investors like Facebook, Silver Lake, Vista Equity, General Atlantic and others. An amount of close to 1,15,700 crores has been raised from the eleven external investors. The remaining 75.3% of Jio is being retained by Reliance Industries. 


As of now, Jio is the largest mobile service provider in India, and the third-largest in the world. The company has a base of close to 400 million subscribers and is growing at a very impressive rate. The price of RIL shares has increased from Rs. 875 in March to Rs. 1,700 by the end of June, which means a rise of 94.3%.

Going forward, it is expected that RIL will try to reduce its other liabilities and focus on fortifying its balance sheet and making it even stronger. The company is currently negotiating with the Saudi Arabian company Aramco for the sale of a stake of its original petrochemical and refinery business. It is also expected that Ambani will bring an IPO for Reliance Jio within the next 5 years.

The road ahead for RIL is brightly lit with the potential imbibed in its telecom and retail businesses. Big things are in store for Reliance, and we expect the company to maintain its status as one of the leaders in the Indian business space.


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