Ripples Advisory, Is Mukesh Ambani responsible for India’s telecom turmoil?
Reliance Jio is a carriage-content-commerce triple play. But for all the cash being spewed by its units, RIL isn’t the only company in India to brandish a strong balance sheet
India’s telecom industry is in turmoil, and depending on whom you ask, one man deserves all the credit or all the blame.
It’s been 18 months since Mukesh Ambani, India’s richest man, entered with Reliance Jio Infocomm Ltd. The 4G wireless network is basically a $31 billion bet on data. Ambani made voice calls—the core offering until then of a dozen mobile operators—absolutely free.
Such audacity both stunned and stung his rivals. Since Jio’s September 2016 launch, smaller incumbents have sold out, closed down or filed for bankruptcy, while the ruling troika of Bharti Airtel Ltd, Vodafone Plc’s India unit and aluminium billionaire Kumar Mangalam Birla’s Idea Cellular Ltd are hemorrhaging. Vodafone and Idea are also merging. The industry is complaining bitterly about how the regulator is favouring Jio over everyone else.
Rajan Matthews, who heads the Cellular Operators Association of India, is wondering who will put up the $10 billion needed annually over the next five to six years to expand 4G and roll out 5G. Banks are so worried about deteriorating credit quality that they would rather recover what they’ve already lent than throw more money into a bottomless pit.
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