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Reliance Jio’s hyper-aggression scorches competition

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Reliance Jio’s hyper-aggression scorches competition

[vc_row][vc_column][vc_column_text]Market analysts predict fall in revenues in telecom sector

By Sindhu Bhattacharya

Reliance Jio Infocomm is living up to the hype surrounding its arrival, having ‘primed’ competition to offer unbelievably low priced data packs over the weekend. Remember, though RJio has said its services will become commercial from April 1, after a six-month free run, it has priced these services dirt cheap and is driving membership of ‘Prime’ aggressively before March ends. This combination of low-priced data packs and Jio Prime membership drive is already killing the telecom industry.

On Sunday, Paytm chief Vijay Shekhar Sharma started a thread where he sought additional data from market leader Bharti Airtel on Twitter. He began by seeking more information about the Rs 549 plan that offers 1 GB data limit every day. Sharma said he called up Airtel customer care and got 60 GB per month data use option in place of current 15 GB monthly usage limit on Rs 2,999 plan.

Though many among the Twitterati panned him saying there was no need to continue paying Rs 2,999 despite increased data usage, Sharma’s thread spurred countless mobile phone users to also seek higher data usage from their respective service providers. Meanwhile, RJio snatched this opportunity and said on twitter that it would offer him 56 GB mobile broadband plan for just Rs 499, which Sharma obviously accepted. It is entirely possible that Bharti will now try and retain Sharma’s connection by offering him matching plans offline, but the point really is that RJio is changing tariff dynamics of the industry and everyone will have to suffer a cut in revenues due to this.

Rajiv Sharma and Darpan Thakkar of HSBC Global Research said in a note to clients that despite RJio beginning commercial operations from April, “We see sector revenues declining in FY18 by 6% as Average Revenue Per User (ARPUs) for the mid- to high-end of the subscriber base with incumbent telcos may get reset to significantly lower levels. The revenue decline may be bigger for the sector if termination rates were to decline meaningfully, as this may add to the ongoing tariff wars the sector currently faces.” Remember, the industry has already seen a similar 6% decline in revenues in the third quarter, when RJio services were free.

In fact, Edelwiess analysts Sandip Agarwal and Pranav Kshatriya had another warning for the embattled telecom industry: they expect RJIO to venture into feature phone segment with aggressive voice offering which will drive down voice realisations, leading to revenue headwinds. So not only is cheap data fast becoming a headache for the leading telcos Bharti, Idea Cellular and Vodafone India, even voice realisations may fall in the near future.

According to this piece, RJio is offering two key monthly plans at Rs 499 and Rs 303, with 28 days of validity each. Apart from basic offerings, the 4G data available to a non-Prime user in the Rs 499 plan is 5GB for 28 days without any daily cap. But Prime members will get 2GB of 4G data every day, which means 56GB in 28 days. The Rs 303 Plan offers 2.5GB 4G data to non-Prime users, valid for 28 days, while Prime users will receive 1GB 4G data every day for 28 days. It is obvious that with such generous data offers, competition to RJio also needs to loosen its purse strings.

RJio is in a hurry to gain market share and this is evident from presentation it gave to analysts on Friday. Sample this: RJio is targeting 50% market share, in a market 50% larger and an Ebitda margin of 50% by 2021. This means it is eying $22 billion revenue and $11billion Ebitda within the next four years. Obviously then, it must wean away customers from competition to achieve such ambitious targets. But are the RJio targets realistic?

Analysts of IIFL Institutional Equities said in a note to clients that RJIO’s Prime membership will threaten industry revenue growth over the next six months.  They also quoted the company’s presentation to say “R JIO thinks that in its 1GB/day Prime plan at Rs303 for 28 days, effective yield will be Rs30/GB and it will go up to Rs50/GB in six months and will be higher in regular packs. We think RJIO has overestimated industry revenue and its revenue market share, and it has underestimated the capability of competition to raise their data capacity.”

Whether Rjio achieves its ambitious medium term targets of market share etc remains to be seen. But in the immediate future, competition cannot afford to sit over RJIo’s unmatched aggression. In these telecom wars, the only beneficiary for now seems to be the Indian phone user.[/vc_column_text][/vc_column][/vc_row]

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Google announces country-specific domain names for its search page

This transition to a centralised domain may help Google optimise AI performance in delivering relevant search results.

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In a significant move aimed at unifying its search experience, Google has announced plans to phase out country-level domain names, such as google.ng for Nigeria and google.com.br for Brazil. Instead, the tech giant will redirect users globally to a standardised domain, google.com. This decision aligns with Google’s ongoing effort to enhance search functionality and accessibility, building on the improvement in local search capabilities introduced in 2017.

In a recent blog post, Google explained that it will begin redirecting traffic from these country code top-level domains (ccTLDs) to google.com. This transition will be implemented gradually over the coming months. Users may be prompted to adjust their search preferences during this process, as the company works to streamline the user experience.

“Historically, our approach to delivering localised search results relied on ccTLDs,” Google stated. “However, our capability to offer localised experiences has evolved significantly, making these distinctions unnecessary.” The company reassured users that the core functionality of its search platform will remain unchanged and that compliance with various national regulations will continue.

This initiative reflects Google’s commitment to improving how search results are tailored to individual users without the need for separate country-specific domains. While the official rationale emphasises enhancing global user experience, some industry experts speculate that the change may also be motivated by a desire to better integrate artificial intelligence (AI) into search results, potentially leading to reduced operational costs.

Google employs AI Overviews, a tool designed to aggregate information from a broad range of online sources to provide concise responses to user inquiries. This transition to a centralised domain may help Google optimise AI performance in delivering relevant search results.

Overall, as Google implements this shift, users can expect a more unified search experience. While changes in browser addresses may occur, Google emphasises that the way search operates and its compliance with national laws will remain consistent. This strategic shift signifies Google’s ongoing efforts to adapt to the evolving digital landscape and user needs globally.

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In HUL vs HCL defamation case, Delhi HC orders take down of Lakme sunscreen ad disparaging Derma Co

Honasa, in its plea to the Delhi High Court, argued that HUL’s claims are misleading and disparage competitors, damaging their reputation. In retaliation, HUL filed a countersuit against Honasa in the Bombay High Court, escalating the corporate feud.

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A legal showdown between Honasa Consumer Ltd. (HCL), the parent company of Mamaearth, and Hindustan Unilever Ltd. (HUL), which owns Lakmé, reached the Delhi High Court this week, with both FMCG giants filing defamation lawsuits against each other. On Thursday, the court ordered HUL to pull its current Lakmé sunscreen advertisements, prompting the company to agree to revise its campaign by removing references to “online bestseller” and altering the depicted packaging colours.

The dispute centres on Lakmé’s recent “SPF Lie Detector Test” campaign, which HCL alleges unfairly targets its Derma Co. sunscreen by questioning the efficacy of rival products.

In the ads, HUL claims that some “online bestseller” sunscreens, marketed as SPF 50, provide protection closer to SPF 20, based on in-vivo testing data from the past decade. While no brands are explicitly named, visuals juxtaposing yellow bottles—resembling Derma Co.’s packaging—against Lakmé’s sparked Honasa’s ire.

Honasa, in its plea to the Delhi High Court, argued that HUL’s claims are misleading and disparage competitors, damaging their reputation. In retaliation, HUL filed a countersuit against Honasa in the Bombay High Court, escalating the corporate feud.

The controversy erupted when Ghazal Alagh, co-founder of Honasa, took to LinkedIn to criticise the FMCG sector’s lack of competitive drive, suggesting that legacy brands like HUL have grown complacent. Her comments were seen as a direct jab at Lakmé’s campaign, which challenges the SPF claims of newer sunscreen brands dominating online markets. “The industry needs fresh competition to shake things up,” Alagh wrote, igniting a public spat.

Lakmé’s campaign asserts that some top-selling sunscreens falsely claim in vivo testing—a method involving live organisms like humans or animals—while delivering subpar protection. In a social media statement, Lakmé doubled down, saying, “Certain online bestsellers advertise SPF 50, but their in-market samples test closer to SPF 20.”

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Sensex and Nifty jump nearly 2% as US suspends additional 26% tariffs on India until July 9

Foreign Institutional Investors (FIIs) had sold equities worth ₹4,358.02 crore on Wednesday, signaling caution, but Friday’s momentum suggested a shift in sentiment.

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Indian stock markets staged a robust rally on Friday, with the BSE Sensex skyrocketing 1,310.11 points, a 1.77% gain, to close at 75,157.26. The NSE Nifty followed suit, climbing 429.40 points or 1.92% to settle at 22,828.55, breaching the 22,900 mark during intra-day trading. The surge came on the heels of a White House announcement suspending additional tariffs on India for 90 days until July 9, offering a reprieve amid global trade tensions.

The US decision, detailed in recent executive orders, pauses levies that President Donald Trump had imposed on April 2, targeting India and roughly 60 other nations. Those duties threatened Indian exports ranging from steel to shrimp, raising concerns about competitiveness in the US, the world’s largest economy. The temporary suspension sparked optimism among Indian investors, propelling gains across major sectors.

Leading the charge among Sensex constituents were heavyweights like Tata Steel, Reliance Industries, Power Grid, NTPC, Kotak Mahindra Bank, and Adani Ports. However, not all stocks joined the rally—Asian Paints and Tata Consultancy Services lagged behind, unable to capitalize on the upbeat mood.

Vinod Nair, Head of Research at Geojit Investments Limited, attributed the market’s buoyancy to the tariff relief. “The unexpected pause on US tariffs provided a much-needed breather amid global uncertainties,” Nair noted. He added that while a major IT firm’s recent results fell short of expectations, its robust order book signaled potential growth in the latter half of FY26.

The Indian markets’ performance stood in stark contrast to global trends, where fears of a US-China tariff war cast a shadow. On Friday, China escalated its trade spat with the US, hiking tariffs on American imports to 125% in response to Washington’s 145% levies on Chinese goods.

Asian markets reflected the unease, with Tokyo’s Nikkei 225 plunging nearly 3% and South Korea’s Kospi slipping, though Shanghai’s SSE Composite and Hong Kong’s Hang Seng bucked the trend with gains. European markets traded lower, while US indices had closed sharply down on Thursday, with the Nasdaq tumbling 4.31%, the S&P 500 falling 3.46%, and the Dow Jones shedding 2.50%.

Back home, the rally followed a lackluster Wednesday, when the Sensex dipped 379.93 points to 73,847.15 and the Nifty fell 136.70 points to 22,399.15. Thursday’s market holiday for Shri Mahavir Jayanti gave investors a pause before Friday’s surge. Foreign Institutional Investors (FIIs) had sold equities worth ₹4,358.02 crore on Wednesday, signaling caution, but Friday’s momentum suggested a shift in sentiment.

Elsewhere, global oil prices edged up, with Brent crude rising 0.32% to $63.53 a barrel, reflecting ongoing volatility in commodity markets.

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