Reliance JioInfocomm is now India’s second-largest telco by revenue market share, dislodging Vodafone India and closing the gap with market leader Bharti Airtel on this score, helped by strong performance in the rural mobile markets and aggressive pricing that has left rivals struggling.
Less than two years since starting 4G services, Mukesh Ambani-controlled Jio’s RMS widened 253 basis points (bps) on-quarter to 22.4% at the end of June, financial data put out by the Telecom Regulatory Authority of India (Trai) showed. Vodafone India’s RMS slumped 175 bps sequentially to 19.3%, while Kumar Mangalam Birla-led Idea Cellular’s share shrank 106 bps to 15.4%. Bharti Airtel’s RMS dipped 12 bps on-quarter to 31.7% as it staved off the impact of a cut in charges for receiving international calls in the first quarter, analysts said.
Airtel’s RMS crept up from 30.7% in the second quarter of FY18, ICICI Securities said in an analysis of the Trai data. However, Jio’s RMS during this period almost doubled to 22.4% from 11.6%. “That Jio would surpass Vodafone India (independently) on RMS in the June quarter was expected, given its strong and sustained growth on this metric, but it now appears to be gradually getting within striking distance of Airtel,” Naveen Kulkarni, an analyst at PhillipCapital, told ET.
Jio had overtaken Idea on RMS in the quarter ended March 2018. The company’s strong showing comes as Vodafone India and Idea prepare to close their merger, which will make the combined entity India’s largest phone company with an RMS of 35%, followed by Airtel and Jio.
Both Vodafone and Idea have been losing ground to Jio amid continuing price wars. The two companies need one final clearance from the company law tribunal for a formal completion of their merger, which has gone past their expected June-end closure. “Jio is enjoying a freeway in B&C (telecom) circles, and its strong performance in the June quarter can particularly be attributed to the C-circles where its adjusted gross revenue (AGR) rose 17.2% sequentially, contributing 17% to the company’s overall AGR,” ICICI Securities said in its note.
Jio, which started in September 2016 with a nationwide 4G network, reported an over 14% sequential jump in overall AGR (including national long distance revenue) to Rs 7,200 crore in the quarter ended June, while Airtel’s rose 0.9% on-quarter to Rs 10,200 crore, inclusive of 45 days revenue of Telenor India, a company it acquired in May.
Vodafone India and Idea suffered sequential falls of 7.1% and 5.2% on this score to Rs 6,200 crore and Rs 5,000 crore, respectively, said Sanjesh Jain, a research analyst at ICICI Securities. Overall telecom sector AGR climbed 1.3% on-quarter to Rs 32,200 crore in April-June, helped largely by Jio and Airtel’s growth.
“Positive movement in industry AGR bodes well for the sector, which suggests the trend will continue, driven by a rise in mobile broadband penetration and reduced ARPU down-trading,” said an analyst at a global brokerage who did not wish to be identified. Jain of ICICI Securities added that it remains to be seen “if Jio is able to sustain its strong performance in the B and C circles where incumbent carriers are fast expanding their 4G networks.” – Gadgets Now