Reliance Jio cancelling 'Summer Surprise' offer may help incumbent telcos' earnings

With Reliance Jio forced to retract on the Jio Prime offer following the directions of telecom regulatory authority, the competition in the industry is likely to ease a bit with the profit margins of its opponents going up through a small margin. Telecom Regulatory Authority of India (TRAI) ordered Jio to withdraw its Prime paid plan as some other telecom companies had complained about the unfair playing ground.

With some improvement expected in the pricing market shares of Bharti Airtel and Idea Cellular rose over by 2%. These closed over at Rs 344.50 and Rs 87.30 respectively.

It can however not be said with certainty that Jio will not come up with such similar promotional offers in the future. Reliance Jio is a new entrant in the telecommunication market and it will certainly come up with many more promotional offers to counter its opponents.

Reliance Jio has led to a price war in the telecom industry and Government might suffer in the long run as it collects spectrum fee from other operators and if such price fluctuation continues in the market, other telecom operators might plan to give up the business entirely, leaving the ground open for Reliance Jio which cannot be considered a great move by any sense.