Reliance Jio expects to gain over 50 per cent of revenue market

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MUMBAI | NEW DELHI: Mukesh Ambani owned Reliance Jio expects to gain over 50 per cent of revenue market share with operating margins of over 50 per cent, based on huge expected data demand and growth, it said in its analyst presentation. Sources said that Jio should achieve this in the next 3-4 years,

As of December 31st, Bharti Airtel had a market share of 33.1 per cent, Vodafone India owned 23.5 per cent, Idea Cellular owned 18.7 per cent, followed by TTSL, Aircel and RCom with 6.2 per cent, 5.5 per cent and 4 per cent market shares, respectively, according to brokerage HSBC, which analyzed Trai data.

Data will be the game changer in Indian telecom industry that is going through one of its biggest price battles, post-Jio’s entry. In the analyst presentation, the company said overall data revenue market in India will touch Rs 3 lakh crore in the next three-four years. This will be caused by the shift from voice to data for subscribers. There will be a drop of Rs one lakh crore from voice revenue which will shift to data, pushing the latter’s growth to Rs 1.3 lakh crore in the same period.

The industry revenue growth is likely to drive government revenues by 50 per cent, the telco said in its presentation. This is ironical since last month telecom commission had pulled up telecom regulator of India (TRAI ) for allowing Jio to continue for its freebies under different promotional offers, that had cost the government Rs 685 crore.

Reliance Jio , which had seven customers join in every second since September 5, disrupted the Indian telecom industry with its ‘Welcome’ and ‘Happy New Year’ offer since its entry on September 5, which offered free voice and data services along with access its digital content ecosystem. This had forced incumbents to slash tariffs, which impacted their revenue and force consolidation in the industry. In the third quarter, Bharti Airtel’s profit plunged 55 per cent, Vodafone India’s on year service revenue fell 1.9 per cent which Idea posted its first ever loss since listing in 2007.

The telco, in the presentation on Monday, said that the industry growth was low in last 5 years, but next 5 years will see rapid growth with data explosion.

Leading global consultants have forecasted demand for data at 500-600 crore GB per month. At a yield of Rs 50 per GB, it translates to Rs 3.0 – 3.6 lakh crore per year, which is equivalent to 1.35 -1.6 per cent of projected GDP, but still lesser than 2.5 per cent in developed economies, stated the presentation.

Reliance Jio estimates that 400 million subscribers in India can now afford to spend Rs 500 and above on digital services, which is much higher than Rs 179 average revenue per user (ARPU) in 2009.

It claims that the Indian data market expanded by six-time with the introduction of Jio in less than 6 months from 20 crore GBs a month to 100 crore GBs a month.

Jio’s VoLTE traffic of 200 crore minutes a day is equal to Vodafone’s circuit switch voice or traditional voice service, the telco said. It added that bulk of network is already built, which can support more than 60 per cent of data demand 2020-2021 in India. The telco currently caters to 85 per cent of mobile data traffic in India today. The firm said it has filed 53 patents till now.

The firm also said that it has capabilities to launch 5G services as well. Till now, Jio offered only 4G services.