Jio Emerged as Second Largest Telco by Revenue Market Share in Q1 2018: CLSA Report

Capital market company CLSA has said that the country’s largest revenue market share in the telecom industry is no more held by Vodafone India, with Reliance Jio emerging as the top dog now. The report shows figures from the latest April-June quarter of the financial year, with numbers spelling big trouble for the international telecom giant, Vodafone, here in India.

Reliance Jio: It’s All About the Numbers

Reliance Jio Infocomm, it appears, has registered strong numbers in the April-June quarter, with a simultaneous plunge of 31 per cent in service earnings at Vodafone India to help prop the Mukesh Ambani-led new disruptor clinch the trophy. Then again, the India arm of Vodafone has already decided to merge with Idea Cellular, and the merger should materialize soon. Jio, meanwhile, seems to be in no mood to raise tariffs to profitable levels, and so the headache is here to stay for quite a while, with Airtel, Vodafone, and Idea all seeing their market share on the decline.

Talking numbers, CLSA said that Reliance Jio Infocomm has increased its revenue market share in India from 20 per cent to 23 per cent in the April-June quarter. The average revenue per user, called ARPU, has surprisingly increased 13 per cent more than what was estimated, CLSA said.

Reliance Jio: Speed Matters

Vodafone India and Idea Cellular are likely to merge in August, and that will make the new telco the leader in revenue market share in India again, with an estimated share of 37 per cent. However, industry experts have shown concern that the merger needs to close quickly, because Jio is currently winning the price wars and could take a bigger share of the revenues in the telecom industry if the Idea and Vodafone delay their merger.

A disturbingly high speed of acquisition of the Indian telco revenues seems to be the strength of Reliance Jio Infocomm, as can be seen by its recent performance. The new player slammed Idea in the March quarter, and took the second position, close behind Vodafone. In fact, it came eerily close to the numero uno, with Vodafone holding a revenue market share of 21 per cent and Jio acquiring 20 per cent. With the numbers from the new April-June quarter, it is clear that the speed in the growth of Reliance Jio Infocomm is increasing unbridled.

Reliance Jio: 10M new Subscribers per Month

For the stress to ease for Airtel and Vodafone-Idea, Reliance Jio needs to raise tariffs, without which they too could not, for the obvious reason of losing customers and hence revenues. Reliance Jio is unlikely to raise tariffs in the near future; the company has been adding up to 10 million new subscribers every month. The growth for Jio is not just in subscribership. The disruptor is seeing a spike in calls, call durations, data usage, and overall revenues. For the new Vodafone-Idea merger and for Airtel (Bharti Airtel) to survive this onslaught by Jio, they need to lower their tariffs, which isn’t possible without raising more capital. Jio has been reporting increasing profits for the last three quarters, while the big players like Airtel, Vodafone and Idea have been reporting either modest profits or a fall in revenues.

Then there is a change in the revenue model of Jio, where Prime membership fee is also included in the revenues. Market analysts say the majority of Jio users are subscribing to its higher-end monthly packages, a trend that applies even to users of Reliance Jio feature phones. With a cable network business in the pipeline and ambitious targets, Reliance Jio is likely to stay ahead in the game for a long time to come.

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