When Reliance Jio
launched its services commercially in September 2016, it was a disruptor with a cheap tariff plan. Nearly three years later, it is the king.
Vodafone Idea, which became the country’s largest telecom operator by subscribers after their merger last year, relinquished the crown to Jio Infocomm, the youngest operator in the domestic telecom scene, based on June quarter figures released by both telecom operators. Jio had pipped Bharti Airtel to take the second spot earlier this month. It took Jio three years to claim the top spot in terms of subscribers.
More importantly, Jio has changed the Indian telecom scene forever. From focus on acquiring customers, the incumbent telcos were forced to shift their strategy to gain revenue market share because of Jio’s aggressive pricing strategy (which has now made India’s data tariff one of the lowest in the world).
The price war led to a bloodbath. Many players shut shop and others were left reeling under losses. A few years back there were around a dozen telecom operators in India. Vodafone Idea has been steadily losing customers since the past few months. It has devised a strategy to focus on shedding the low-value subscriber, who clog up its network.
In the April-to-June quarter, the telco lost 14.1 million subscribers. As of June it had 320 million subscribers as against Jio’s 331.3 million.
The market scene
At present, the three telcos — Jio, Voda Idea and Airtel — are almost evenly balanced in terms of their subscriber market shares.
According to data from the Telecom Regulatory Authority of India (Trai), as on May (the latest available), Jio had a 27.8 per cent share of the subscribers in the market, while Airtel had 27.6 per cent and Vodafone Idea had 33 per cent share. The June numbers (yet to be released by Trai), would see the shift in Voda Idea’s subscriber market share. All three have subscriber bases in the range of 320 million to 330 million at the moment.
This opens the ground for another round of intense battle among the telcos.
Taking it rural
Jio has taken the fight to the rural areas where it has gained a significant share. Between January and March this year, Jio added almost 16 million rural subscribers, while Bharti Airtel and Vodafone Idea lost around 20 million and 13 million, respectively.
As Jio continues to make further inroads into the hinterland, the internet penetration too improves — during Jan-March quarter of 2019, the rural internet subscriber base jumped by 13.7 million.
Incumbent telcos, however, continue to lose subscribers in the rural market as they weed out low-value customers. This has led to a net loss in the rural subscriber space — around 17 million have gone out of the system between January to March. Jio’s subscriber addition trajectory has been strong since its launch in September 2016. By February 2017, Jio had 100 million subscribers.
A disruptor strategy
The company began operations by offering free data and voice calls for the first three months and later extended it by another three months. The initial euphoria around Jio led to people standing in queue to get SIM cards and even purchase LYF-branded devices to access Jio’s network.
In August 2017, the operator launched its flagship feature phone called JioPhone in order to reach the masses that could not afford smartphones to support Jio’s LTE network. This led its growth in the tier-II and -III circles. Back in 2016, the Indian telecom industry was a multiplayer market, consumers were frugal about their data and voice usage, and very few cared to consume video content on their mobile data network. By 2018, people were consuming videos in trains, buses, roadsides, and homes on their mobile network.
With rising penetration of broadband customers, along with higher data usage, the proportion of data subscribers in total subscribers has increased rapidly for Bharti Airtel and Vodafone Idea too — from 28-33 per cent in Q1FY19 to 41-44 per cent in Q4FY19.
Content provider and over-the-top (OTT) services such as Amazon Prime, Netflix, Eros Now, Voot, Hotstar, Gaana and Saavn among many others took off in a big way as a result. By 2019, Jio not only owned Saavn but has its own content apps like JioCinema and JioTV leading app consumption in the country.
Global internet giants Facebook, Google and Amazon are prioritising Indian language services to attract internet consumers in far-flung rural areas who prefer content in local language than English. Jio claimed India has become the most active market for Google and Facebook, with an estimated 70 million additions in the first year of its operations. While the sector has seen extreme lows with smaller players slipping into extreme losses only to be consumed by larger telcos, including the consolidation of behemoths Vodafone and Idea.
From average revenue per user of (ARPU) of Rs 131 (September 2016, as provided by Trai) the industry reached a low of ARPU of Rs 71 in March 2019 after stabilising. During this time, incumbent telcos consistently lost revenue to post double-digit losses.