Reliance Jio begins to devour Vodafone Idea, Airtel user base

New Delhi: Reliance Jio Infocomm Ltd has wrested market share from Bharti Airtel Ltd and Vodafone Idea Ltd, as the relatively new entrant in the telecom sector continued to add a large number of users even as its bigger rivals lost customers. Reliance Jio added 10.5 million users in October while Vodafone Idea and Airtel lost 7.3 million and 1.8 million users, respectively, according to data released by the Telecom Regulatory Authority of India (Trai) on Wednesday. India’s overall wireless user base grew by just 724,725 subscribers during the month.

Reliance Jio begins to devour Vodafone Idea, Airtel user base

Till now, the growth of Reliance Jio was largely attributed to smaller companies exiting the market because of the brutal tariff war triggered by its entry in late 2016. The wave of telecom sector consolidation that followed has left just three operators in the market. That Reliance Jio has added close to 10 million users almost every month in 2018 implies that the pressure on Vodafone Idea and Airtel in unlikely to abate.

In September, Reliance Jio added 13.02 million subscribers, while Vodafone Idea lost 6.68 million subscribers and Airtel lost 2.35 million users. Before September, Vodafone and Idea competed as separate entities. Airtel did not lose subscribers in the first eight months of 2018.

“It would appear that while incumbents are shedding marginal subscribers, Reliance Jio is acquiring new ones. However, it would be useful to know the number of subscribers who use Jio as their primary SIM,” said Mahesh Uppal, director at communications consulting firm ComFirst India. “The incumbents are undoubtedly under great pressure and are struggling to compete. The large debt sitting on their books further impacts their ability to raise funds and invest in their networks.”

Vodafone Idea reported a ₹4,970 crore loss in the September quarter, while Airtel posted a meagre profit of ₹118 crore.

In contrast, Reliance Jio made a profit of ₹681 crore during the same period.

In a strategic shift to boost profitability, Airtel and Vodafone Idea in November also introduced minimum recharge plans starting at ₹35 a month, with an aim to reduce the number of low-paying and inactive customers, rein in selling expenses and focus on improving services to better-paying customers. This, the two operators believe, would improve average revenue per user, or arpu, as customers would do more recharges.

However, it seems that the competitive pressure on incumbents is likely to linger for some more time, especially given that Reliance Jio is not only grabbing subscribers but also cornering a large portion of the revenue market share. In the July-September period, Reliance Jio more than doubled its revenue market share to 26.1%, compared with just 11.6% in the same quarter in 2017.

During the same period, Airtel’s revenue market share was almost constant, while Vodafone Idea’s share shrank from 36.2% to 32.8%.

“Reliance Jio, the erstwhile challenger in the market, is now dictating terms in the telecom sector. And this year, it may well emerge as the number one player by both subscriber base and revenue market share,” said Uppal.

source: livemint


Social Media Auto Publish Powered By : XYZScripts.com