India’s richest man, Mukesh Ambani, is its owner. And now, after creating widespread disruption in the Indian mobile phone services market by doling out freebies and discounts, Reliance Jiohas feels compelled to switch to the Scrooge pattern: It has cut nearly 5,000 jobs.
The telecom giant reportedly suffered a dip in its operating margins in the January-March quarter and its rivals have also narrowed gaps in terms of average revenue per user (ARPU) and usage of data and voice services. Its customer base was 307 million by the end of March.
Its nearest rival Airtel’s ARPU for the January-March quarter stood at 123 rupees, which is striking distance from Reliance Jio’s 126.2 rupees. In fact, there has been a continuous slide in Reliance Jio’s ARPU. In December 2017 quarter it was 154 rupees, while a year later in the same quarter in 2018 it fell to 130 rupees.
As for data and voice usage per user, Airtel has surpassed Reliance Jio in the January-March quarter. Airtel’s data usage per customer was 11.04 GB, as against 10.09 GB of Reliance Jio, whereas Airtel’s voice usage per customer was 858 minutes, compared with Reliance Jio’s 823 minutes. It may be noted that Reliance Jio had been leading in both the parameters since the commercial launch of its services in September 2016.
Among those who lost jobs in Reliance Jio, most were from the consumer-facing side. Other departments that got impacted include supply chain, administration, networks, human resources and finance, Economic Times reports.
Out of around 5,000 employees who got the pink slip, around 500-600 were permanent staff, while the rest were on contract, the daily added.
Industry observers claim Reliance Jio’s aggressive pricing coupled with high capital expenditure to expand 4G network has resulted in cost pressures.
Interestingly Reliance Jio’s rock bottom pricing had led to a shakeout in the telecom with many shutting down their operations and some going for mergers. Currently, the only other companies remaining in the market are Bharti Airtel, Vodafone-Idea and state-owned Bharat Sanchar Nigam Ltd (BSNL).