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Jio consolidates RMS leadership in July-September

Jio recently said it would raise tariffs, if directed by Trai, in a manner that does not hurt data consumption or growth in digital adoption. This was a day after Voda Idea and Airtel said they would raise tariffs next month. It has already started charging customers for outbound calls to other networks.

, ET Bureau|
Nov 25, 2019, 09.28 AM IST
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Jio recently said it would raise tariffs, if directed by Trai, in a manner that does not hurt data consumption or growth in digital adoption.
KOLKATA: Reliance Jio Infocomm consolidated its leadership by revenue market share (RMS) in the July-September quarter, widening its lead over No 2 carrier, Bharti Airtel on this score, helped by strong growth in key metros and across rural markets, while Vodafone Idea continued to lose ground in most circles.

Mukesh Ambani-owned Jio reported a strong 348 basis points (bps) sequential jump in the September quarter to reach an RMS of 35%, while Bharti Airtel (including Tata Teleservices) gained a modest 70 bps on-quarter for a 32.1% RMS on the back of revenue growth in Mumbai, Maharashtra and Tamil Nadu. Vodafone Idea’s RMS, by contrast, dipped 66 bps sequentially to 27.2% in the September quarter as it lost market share in 20 out of the 22 circles, including leadership markets, financial data collated by the Telecom Regulatory Authority of India (Trai) showed.

Jio’s RMS lead over Airtel -- even after the latter consolidating Tata Tele’s cellular mobility business with itself – is at nearly 300 bps in the fiscal second quarter. In the June quarter, Jio and Airtel’s RMS stood at 31.7% and 30% respectively.

Jio’s robust RMS performance in the September quarter “is attributable to its strong revenue growth in Delhi, Mumbai, Kolkata and Gujarat, and its No 1 position in 13 circles,” continuing with its strong show in “the `B’ and `C’ circles (read: small towns and rural markets),” Naval Seth, telecom analyst at Emkay Global, said in a note, analysing Trai data.

Rajiv Sharma, head of research at SBICap Securities estimates “Jio’s RMS will exceed 40% by early-FY21, in an industry-wide tariff hike scenario, assuming the market leader continues with its strong subscriber gains”.

Jio recently said it would raise tariffs, if directed by Trai, in a manner that does not hurt data consumption or growth in digital adoption. This was a day after Voda Idea and Airtel said they would raise tariffs next month. It has already started charging customers for outbound calls to other networks.

The “single-largest reason” behind Jio’s strong RMS performance in the September quarter, he said “is its strong subscriber gains and subscriber market share growth”.

The country’s youngest telco added a net 24 million customers in the July-September period, taking its 4G user base to 355.2 million at the end of fiscal second quarter. Its customer market share as on September 30, 2019, stood at 30.26%, well ahead of Airtel’s 27.74% and within striking distance of Voda Idea’s 31.73%, according to latest Trai data.

Jio, in fact, has reported 7% on-quarter growth in its quarterly adjusted gross revenue (including national long distance or `NLD’ service revenue) in the July-September period at Rs 11,666 crore. By contrast, Bharti Airtel (including Tata Tele) and Vodafone Idea reported 1% and 6% sequential falls in quarterly AGR (including NLD revenue) to Rs 10,710 crore and Rs 9,073 crore respectively, said Emkay, analysing telco financial data put out by the sector regulator.

An analysis of Trai data shows Airtel sequentially gained AGR in Mumbai (7%), Maharashtra (3%) and Tamil Nadu (3%), but lost revenue in 14 circles. Voda Idea, in turn, lost AGR in key leadership markets such as Kerala (2%), MP (13%), Maharashtra (3%) and Gujarat (3%).

The telecom industry though continued to report positive AGR (including NLD) growth on-year, with 5% gain at Rs 33,319 crore in the September quarter. The sector had returned to positive AGR growth in the June quarter, FY20, since the third quarter of fiscal 2017, driven by rise in average revenue per user (ARPU).

Jio though continues to outgun older rivals, reporting a 45% on-year jump in bottom-line to Rs 990 crore in the fiscal second quarter, on the back of strong subscriber adds and high data usage. By contrast, Voda Idea and Airtel posted unprecedented losses of Rs 50,922 crore and Rs 23,045 crore respectively in the September quarter, after provisioning for AGR-based dues following a recent Supreme Court ruling. Both incumbents have also raised doubts about their ability to continue as going concerns, without substantial relief from the government.

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