Reliance Jio impact: Top 3 telcos lose 5 million users in August

If declining profitability has been a concern for the telecom industry since Reliance Jio disrupted the market with deep discounts, now there’s much more to worry. The latest numbers show that the top three telcos—Bharti Airtel, Vodafone and Idea Cellular—have together lost close to 5 million subscribers in August. 

This is the first time since the launch of Jio last year that Airtel’s user base has dipped. 

While Vodafone and Idea Cellular lost around 2.4 million and 2.8 million subscribers, respectively, market leader Bharti Airtel’s count dropped by 200,000  in August. 

“The health of industry is driven by revenue and we have to see if revenue is shifting in favour of Reliance Jio. In India, people have got multiple SIMs and losing subscribers does not give a clear indication of an operator’s health,’’ Prashant Singhal, Global Telecommunications Leader, EY said.  There will be greater clarity when telcos declare their financial numbers for September quarter, Singhal pointed out.  

Another analyst said that it’s now obvious that all the new customers are going to Jio. But the consensus seems to be that impact of subscriber loss can be assessed when operators report their adjusted gross revenue (AGR) figures for the September quarter.

“Till recently, Airtel managed to grow its revenues despite a slowdown in subscriber additions. Vodafone and Idea’s revenues did not fall very fast. But that’s going to change going forward,” another analyst, who did not want to be named, said. 

GSM industry body COAI, however, believes that the loss of customers does not necessarily mean that people are switching to Jio and that subscribers could be surrendering multiple connections. 

COAI Director General Rajan S Mathews said, “Now when consumers have to pay, they are making choices.”  Jio started charging for its services in April. 

“Jio has not shared its numbers with us and they have informed us they expect to do so in the future. The incumbents have lost around 5 million subscribers in August and if Jio’s subscriber base increased by 5 million, we can say the customers are going to Jio but we do not have their numbers as yet for the month. We will have to wait till Trai (Telecom Regulatory Authority of India) releases the numbers,” he added.

The subscriber loss could also be in part because of services of inactive customers being closed and users surrendering multiple connections in the backdrop of Aadhaar re-verification process. “If mobile number portability also increases, it would mean customers are switching from another operator to Jio. But we have not seen MNP increasing materially over the past few months,” he added.        

Mukesh Ambani-owned Reliance Jio, which launched its commercial services in September last year, has already got a subscriber market share of 13.46 per cent in just one year of operations. Jio had as many as 128.58 million subscribers at the end of July. Airtel, with 281.04 million subscribers, has a market share of 29.63 per cent followed by Vodafone with 208.14 million subscribers and 21.94 per cent market share. Idea Cellular, with 191.05 million subscribers, has a market share of 20.14 per cent.

* Jio numbers are from July 2017; it shares its numbers with Trai. Source: COAI


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