Bill Barney, CEO of Reliance Communications, has within his portfolio long haul transport, enterprise, cloud and mobile operations in India. And the emergence of Reliance Jio, which has launched an “all-4G” network in India, has forced the whole industry to respond, both by investing fast in new 4G networks, and by cutting prices in a big way to respond to Reliance Jio’s disruptive “4 GB per day no charge data usage.” As a direct result, profit margins, cash flow and average revenue per user are going to drop. Oddly enough, in spurring a fast move into the 4G era, Reliance Jio also might (will) create a mobile industry whose revenues are smaller than they used to be.
Given a big upsurge in mobile data subscriptions, that might seem nonsensical. But the problem is that voice revenues, which represent perhaps 80 percent of total industry revenues, now will begin the plummet to zero price levels that has been seen elsewhere.
Big mergers are going to happen, restructuring the industry, over the next two years.