Headlines of the Day
Jio fought back vs Airtel in Q4, but subscriber war to intensify
A combination of strong consumer appetite for its recent cheaper JioPhone offers, increased market aggression via higher channel spends to grab Vodafone Idea (Vi) users through the MNP route and the disappearing impact of farmers’ protests have helped Reliance Jio fight back and stall arch rival Bharti Airtel’s recent superior subscriber additions pace, say analysts.
They added that the fight for Vi’s and new data subscribers is set to further intensify as Jio’s strong spectrum footprint, courtesy recent purchases, would help it boost network capacity and experience, and take on Airtel. The Sunil Mittal-led telco has also bolstered its spectrum footprint through its auction buys and expanded its data network through record tower additions in the fourth quarter.
Such a no-holds barred contest between the nation’s top two telcos, they said, is likely to further dent cash-strapped Vi’s market share and trigger bigger customer losses unless the latter closes its long-pending fundraise and ramps up 4G networks.
“Jio going aggressive on sales channel commissions to target Vi users coupled with strong market traction of its recent JioPhone offers have helped it recapture lost ground in its fight against Airtel and take the lead in net user additions in the March quarter,” Rohan Dhamija, partner & head (India & Middle East) at Analysys Mason, told ET.
BofA Securities backed the view, saying “Bharti benefited disproportionately in 2Q/3Q at the expense of Jio and that trend is now reversing”.
Jio added a net 15.4 million users in the January-March period compared to Airtel’s 13.4 million. This, after lagging behind Airtel, which had added far higher numbers of mobile broadband users in the September and December quarters of FY21, cornering a large chunk of customers leaving Vi.
BNP Paribas said its recent interactions with telco distributors in multiple geographies suggested increased aggression from both Jio and Airtel in acquiring Vi’s customers through the MNP route.
“Operators are offering two-month free services to customers porting in, along with gifts and free service in certain markets, and we see this as a tactical move by the larger operators to acquire customers from Vi,” the global brokerage said in a note.
An analyst at another foreign brokerage said “Jio managed to reverse the customer adds trend in its favour in Q4FY21 by matching Airtel on free service offers and also doling out big channel commissions to distributor partners to make juicier offers to attract customers porting out from Vi”.
Some analysts expect Jio to retain its lead over Airtel on 4G user additions in the next two quarters, leveraging its strong spectrum holdings, while others say it won’t be a cakewalk with enough opportunity for the No 2 carrier to catch up.
They pointed out that Airtel adding 8,300 network towers in the March quarter—the highest in its history—coupled with its countrywide sub-Ghz spectrum holdings, equips it to offer 4G services to an additional 90 million users and drive market share gains.
UK-based New Street Research LLC said “Bharti’s Indian mobile business is valued by the market at $42 billion, which compares to Jio’s market valuation of $67 billion, basis recent stake sales”. To sustain this valuation gap, it said, Jio must be expected to grow Ebitda (read: operating income) more strongly than Bharti.
But it expects “the reverse to happen and the gap to narrow further” as the reported Indian mobile Ebitda gap between the two operators is already down to 28%, having been over 100% at one point. ET Telecom
You must be logged in to post a comment Login