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BW Businessworld

Living With Jio

Industry estimates show that telecom revenues plunged by as much as two per cent, or roughly around Rs 1.9 lakh crore in FY17. This was largely due to free pricing by RJio during the second half of FY17 which forced a similar reaction from industry

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A complete year has gone by since Reliance Jio (RJio) disrupted the domestic telecom market. The entry of RJio has had more than a little impact on the market share of incumbents. For example, the three leading telcos — Vodafone, Bharti, and Idea — are said to have lost a combined market share of over four per cent in the last 12 months alone.

Others have lost even more — perhaps double the combined market share figures of the three leading telcos. RJio, on the other hand, managed to gain 133 million subscribers (end of August 2017), or over 11 per cent market share. Perhaps everyone’s loss was RJio’s gain. But rival Bharti is said to have gained at least 23 million active subscribers too in the August 2016-August 2017 period when other incumbents lost their active subscribers, ostensibly because of the RJio onslaught.  

Industry estimates show that telecom revenues plunged by as much as two per cent, or roughly around Rs 1.9 lakh crore in FY17. This was largely due to free pricing by RJio during the second half of  FY17 which forced a similar reaction from industry. But all is not lost, if experts are to be believed. Says Tanu Sharma, Associate Director, Corporates for India Research and Ratings, a Fitch company,  “The industry revenues could revive over a 12-18 months’ period led by RJio increasing its tariffs, exit of smaller telcos and expansion of the data revenue base, leading to the  probability of a relatively stable pricing environment, with lower competitors per circle.”

All said and done, with the entry and dominance of RJio, one of the biggest impacts has been on the data consumption pattern. All of RJio’s wireless subscribers are by default broadband data subscribers.  According to Sharma, this has increased not only the absolute number of data subscribers but its discounted tariffs have also increased the data consumption multifold. “This is reflected in the industry-wide per user data usage which has increased by 784 per cent to 1.2 GB in the quarter ending June 2017 from 143 MB in the quarter ended June 2016.”

RJio’s per user data consumption is way above the industry average at 10 GB per month. An India ratings analysis shows that Bharti and Idea have also seen a substantial increase in their data consumption to 4.1 GB (up four times year-on-year) and 3.8 GB (up 5.5 times y-o-y) respectively in the second quarter of  FY18.  “The new key performance indicator for telcos is ‘blended ARPU’ for voice and data combined as most operators have moved towards bundling of voice and data plans so that per MB  pricing has lost relevance and voice is being offered as a free service mostly,” it says. For the sake of healthy competition in the market, one can only hope that the financial health of the other telecom players improve quickly. 


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Magazine 25 November 2017 Jio vodafone airtel