MVNO market might fall face first because of Reliance Jio

Mukesh Ambani-backed Reliance Jio’s entry into the telecom sector, along with its disruptive pricing, is all set to put a big dent on the mobile virtual network operator (MVNO) market, which was predicted at Rs 26,000 crore. Jio’s entry has already affected existing telcos, forcing them to slash costs and take aggressive decisions to stay afloat.

It was a year ago that the Modi government had allowed telcos to sell bulk voice minutes and bandwidth to smaller entities, which were called MVNOs and could resell in less-penetrated rural and remote regions with tele-density below the half-way mark.

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However, the impact on MVNOs could be so much, as per industry experts, that they would find it tough to negotiate feasible terms with telcos that could have partnered with them, since they are themselves fighting to hold on to margins, thanks to Jio.

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"The dynamics for the MVNO industry could change with Jio's ultra-affordable pricing impact, and with the number of telcos also likely to fall with the current wave of consolidation, the parenting landscape for VNOs might also shrink as there will be fewer telecom operators," Amitabh Singhal, director, Telxess Consulting Services, told ET.

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EY's global telecom leader Prashant Singhal shares the view. As per Singh, lower tariff regime adopted by service providers has had a huge impact on telcos' mobile data revenue growth, and increased data allowance has led to an effective downfall of the price per GB.

(Image source Blogspot)