Jio and Airtel Duopoly May Happen Soon: Jefferies

Reliance Jio and Bharti Airtel have been dominant forces in the Indian telecom industry over the last five years. Vodafone Idea (Vi), a third-private telecom player, has been struggling to lift its business activities since its merger in 2018. Analysts have maintained that Vi needs to raise funds fast so that it can meet its short-term payments of debt and statutory dues, as well as roll out 5G and expand 4G. But the market has not seen any major developments related to fundraising for Vi.

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Due to inferior business performance, Vi has been losing customers to its competitors for several years now. Due to some recent developments, such as the launch of 5G by the competitors, revamped postpaid offerings, and the announcement of the Jio Bharat phone platform by Reliance Jio, Jefferies Financial Group Inc believes that Vi may lose users at a faster rate to the competitors. BSNL (Bharat Sanchar Nigam Limited) is not really considered competition for Vi because the state-run telco doesn’t offer PAN-India 4G services yet.

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There are millions of 2G users in the networks of Airtel and Vi. The launch of the Jio Bharat phone platform is to attract these 2G customers and offer them 4G services. This would accelerate the growth of subscriber addition for Jio but would mean a faster subscriber loss for Vi. In case Vi keeps losing customers to competitors, the telecom market of India would turn into a duopoly sooner than expected, said Jefferies.