Why a new Telecommunication company by Reliance? (Jio Series- Part 2)

In the first article of the Jio Series Reliance Jio – What it exactly is? (Part-1) we talked about Jio and about the network technology it is using. In the part 2, of the Jio Series we will discuss why the richest man of India started yet another telecommunication firm.

Apologies, because this article might go a bit business focussed.

The actual story:

The story dates back to 2002 when Dhirubhai Ambani died. After his death, few ownership issues creeped in between the Ambani brothers. Despite their global success they got in a bitter dispute over a simple gas contract which sent a wave of fear through the government to the prime minister’s office. Claims state that Mukesh Ambani reportedly tried to oust Anil Ambani from the board. This led to a feud between them. To resolve the issues, Kokilaben (Wife of Mukesh Ambani) intervened and arranged a de-merger.

In December 2005, the split got approved as Mukesh got Reliance Industries & IPCL and Anil got Reliance Infocomm, Reliance Energy and Reliance Capital. Although Anil Ambani got the Reliance Infocomm, it was Mukesh Ambani who started it and revolutionized the Indian mobile industry by reducing the call rates in the early 2000s, which made mobile phones affordable to Indians. It was his idea all the way, while Anil Ambani was not even having a seat in it’s board of directors. Further, a non-compete clause was signed between the brothers so that they will not hinder in each other’s business.

Inception of Jio:

In 2010, as soon as the clause expired Mukesh Ambani bought 96% stakes of Infotel Broadband which had won 4G spectrum in all sectors in India. Later the company was renamed to Reliance Jio Infocomm Limited (or Jio). Then they began to construct full-fledged nationwide fibre optic network.

They have laid 250,000+ KMs of high quality fiber optic cable and have installed over 90,000 eco-friendly 4G towers. And, Jio is using cables of 288 fibers or 96 fibers in most places while other players have cables with only 12-24 fibers. More fibers means, they will have more bandwidth and more speed which removes the competition from the game. Apart from this, Jio also have access to the cables laid by Reliance communications.

Image Source: Google

India is divided into 22 zones and Infotel Broadband (Now Jio) won spectrum in all 22 zones of India during 2010 auctions and they were building their network infrastructure till now. Jio has the capability of providing 4G services in all 22 circles. Bharti Airtel can provide it in 15, Idea in 10 and Vodafone in 8 circles. So, they are the only company which can give 4G all over India.

Image Source : Google Maps

Click here to have a look at the Jio Route.

Investments:

Reliance Industries has already invested 150,000 crores in the company and Mukesh Ambani calls it the “Largest startup of the world”. Interestingly, this forced Airtel to put 60,000 crores in modernizing their infrastructure. Reliance Industries also own two Submarine landing stations which are 8000 kms long The Bay of Bengal Gateway and another one is a part of 20000 kms long Asia-Africa-Europe One submarine Cable system.

 

Along with it’s huge investment, the firm  is ready to rock the telecom world. In this article, we talked a bit about business side of Jio and in the next article we will be talking about the most interesting part of Jio, THE BUSINESS MODEL.

Happy Reading!!