Customer Acquisition Cost of Jio Well Below the Numbers Reported by Idea and Airtel: CLSA

Analysts have been making a thorough breakdown of Reliance Jio Infocomm’s FY18 report and have come to the conclusion that the Mukesh Ambani led telco is pegging a customer acquisition cost which is unbeatable in the market. The telco’s efficiency is not only seen in the exceptionally low customer acquisition cost but also in the employee expenses which have gone down from Rs 2,700 crore in FY17 to Rs 960 crore in the FY18, a whopping 64% fall. This data, as per the analysts’ report alludes that a large portion has been capitalised. This includes staff costs related to Jio’s broadband and enterprise businesses that haven’t yet commenced operations.

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The CLSA pointed out that Jio’s acquisition cost for every new subscriber which it acquires is Rs 129. On the other hand, the third largest telco in the country, Idea Cellular’s report for the same figure is as much as 40% higher at Rs 216.

According to an ET report, the said firm commented that these numbers were low for Reliance Jio because “lesser (number of) Jio postpaid subscribers, a large share of Reliance retail stores and a big share of subscribers doing direct recharges via the company’s MyJio app that has over 150 million downloads”.

Although, the same data regarding the cost of customer acquisition is not yet available for the largest telco of the country, Bharti Airtel, an analyst at Global brokerage said “it would be a challenge to arrive at a like-to-like comparison in Airtel’s subscriber acquisition cost vis-à-vis Jio/Idea, since the latter two telcos primarily operate mobile services in India, unlike Airtel which has a significant Africa operation along with several non-mobile businesses”.

ICICI Securities also remarked on Reliance Jio Infocomm’s FY18 report which revealed some stats of the company. The brokerage firm said, “lower Rs 960 crore employee cost could be due to such cost being charged only for 9 months in FY18 and that employee (costs) relating the company’s fibre-to-the-home (FTTH) and enterprise (services) businesses continue to be capitalised, pending a commercial launch.”