The investment by Facebook into Mukesh Ambani’s Reliance Jio platform is expected send shock waves through the Indian telecom industry, which could impact Airtel and Vodafone Idea
“Up to now Bharti and Vodafone Idea have been able to promote their ‘openness’ as key differentiators versus Jio more closed approach to digital services. However, with WhatsApp firmly entrenched as the dominant OTT messaging platform in India, Jio will now have a channel for promoting their other digital services directly to the customers of their competitors. Moreover, over time it’s also possible to expect Jio to try to use the WhatsApp relationship to try to convert Bharti and Vodafone Idea customer to use their network. We see this as a negative development for both Bharti and Vodafone Idea,” said analysts at brokerage firm Bernstein.
However, analysts at equity research firm Jefferies said that Facebook’s $5.8 billion interest in the Indian telecom space reflects a turnaround in the sector.
“Aggression suits a new entrant and not a market leader. If Jio cuts tariffs, it hurts itself the most. Secondly, Reliance Jio’s tariff remains at 7-20 per cent discount to that of peers and its JioPhone offering should help the company remain competitive and help subscriber additions as it has in the past. However, we do note that the likelihood of further tariff hikes in 2020 will likely reduce,” Jefferies said in a research report.