The growth in Jio’s subscriber base doesn’t imply that the tariff war is likely to subside anytime soon.
RIL Chief Mukesh Ambani-controlled Reliance Jio is going great guns with the subscriber numbers. The latest data released by telecom regulator TRAI (Telecom Regulatory Authority of India) shows that Jio has added 11.7 million subscribers in July taking its total subscriber count to 227 million. This is the highest addition among all telecom operators. Vodafone India and Bharti Airtel added just 0.6 million and 0.31 million subs, respectively. Jio is now the third-largest telecom operator in the market after Vodafone Idea Ltd (443.9 million) and Airtel (369 million, including Tata Tele subs).
For the past several months, Jio has topped the charts when it comes to subscriber additions. The growth in Jio’s subs base doesn’t imply that the tariff war is likely to subside. Industry experts hold a view that until Jio reaches a subs base which is nearly equivalent to its two rivals, it will continue to offer aggressive tariffs.
India is a price-sensitive market, where over 90 per cent of the telecom consumers are low-value prepaid subs. Unlike postpaid customers, prepaid subs lack loyalty to a particular brand, and tend to gravitate towards telcos offering cheap data rates. The growing number of mobile number portability (MNP) requests also highlights this trend. For instance, since the implementation of MNP over seven years ago, the MNP requests have reached 391 million, that’s more than the sub base of Airtel.
As pointed out by telecom secretary Aruna Sundararajan in a July interview to Business Today, there will be probably a situation where each of the market players will have the same size, and that’s when the tariff war will shift to a service war. “By 2019 or the first quarter of 2020, I believe the fundamentals of the market will take over, and you will see enough monetisation. Jio has the same compulsion as others. All kinds of inputs that I am receiving are that once they [Jio] get to have respectable [subscriber] share, they will come in line with the rest of the sector,” she said.
Last year, Jio had set for itself an ambitious target of reaching 50 per cent revenue market share by 2021. Its free voice calls and super-cheap data tariffs has led to significant shift in the sector over the past two years. The number of telcos have gone down substantially, and the larger operators are finding it difficult to hold their ground. – Business Today