Reliance Dials JioPhone for Growth, Jio Momentum Unlikely to Sustain Say Analysts

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Bharti Airtel, the second largest wireless operator in India is “not affected” with the momentum generated by the JioPhone in March, says Motilal Oswal Financial Services. The Indian diversified financial services firm in a report on Saturday said that Reliance Jio, the largest wireless operator in India received a “boost from the launch of JioPhone.” Motilal Oswal said the “JioPhone effect” enabled the largest wireless operator to “revive” its user additions with Jio recording over 79 lakh gross user additions and over 74 lakh active user additions in March. In comparison, the firm highlighted that Jio recorded a “muted” user addition of around 10 lakhs to 20 lakhs per month in the past six to seven months.

Reliance Jio User Additions Spike with “Aggressive” JioPhone Schemes

The report is on the heels of the Telecom Regulatory Authority of India (Trai) on Friday releasing the Telecom Subscription Data for the period ended March 31, 2021. The Trai data highlights that the telecom operators in India added over 1.3 crore users in March with Airtel and Vodafone Idea also adding over 40 lakh and 10 lakh gross users respectively. Further, the state-run Bharat Sanchar Nigam Limited (BSNL) is said to have added 194,310 users in March while Mahanagar Telephone Nigam Limited (MTNL) lost over 8000 users in the month.

“Vodafone Idea’s (VIL) gross subscriber additions remained positive for the second month in a row, after declining for 15 months on the trot,” Motilal Oswal said in its report. “However, active subscribers continued to decline since its integration in Nov’18.”

The Trai data highlights that Vodafone Idea lost 380,000 active users in March, with the total active user base of the third largest operator in India dropping to 25.57 crores.

However, Motilal Oswal said that the overall 4G user additions in March also received a “push from the JioPhone launch” with the industry recording 1.25 crore new users. The firm said that the 4G user base in India has now increased to 75.5 crores with 4G users “now accounting for 75.9%” of overall active users in India.

In late February, Jio announced a new scheme for the JioPhone that provided users “unlimited services” for two years for Rs 1999. The company highlighted that the users who pay Rs 1999 will receive a “new” JioPhone along with “unlimited voice calls and “unlimited data” restricted to 2GB per month for the two year period. Additionally, the company in early March unveiled five new data plans for the JioPhone priced at Rs 22, Rs 52, Rs 72, Rs 102 and Rs 152.

ICICI Securities in a report on Sunday said that Jio gained users with an “aggressive offer on the JioPhone” but that the operator is “unlikely to sustain” the users in the long term. The subsidiary of ICICI Bank in its report said the “most” new users are “coming as second SIM.”

“RJio had seen active subs dip in [the] past two months; sudden jump was on account of aggressive long validity offer on JioPhone; thus, we don’t think the net add will be sustaining. Moreover, we have not seen the new offer helping RJio to grow [its] active subs portion,” ICICI Securities said in its report.

Reliance Industries in its annual report for the financial year ended March 31, 2021, said that the JioPhone since its unveiling in 2017, “upgraded over 100 million users.” The report released in early June also highlights that the mobile data penetration has increased to 35% in rural areas as compared to 13% prior to the arrival of Jio in the marketspace.

Bharti Airtel Holds Position Despite Jio Aggression Say Analysts

Meanwhile, ICICI Securities in its report highlighted that the active user base of Airtel increased over 48 lakh to 34.4 crores in March. The firm said that the increase in active user base of Airtel was aided by its gross user additions “indicating the improving quality” of user additions.

“Bharti has maintained net add despite aggression from RJio, which is good execution,” ICICI Securities said in its report.

Motilal Oswal said that Airtel was “undeterred by Jiophone launch” and that the operator “continued its steady run-rate” of user additions in March. Further, the firm highlighted that Airtel has “maintained its top spot in terms of active subscriber market share” at 34.6% in the month.

“MNP has remained elevated in the past two months, and we suspect Bharti is gaining from it,” ICICI Securities said in its report.

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Born in India, Yogesh loves to travel and has lived in multiple countries including New Zealand and Canada. His bylines can be found on various newspapers and blogs throughout the world, including Vancouver Sun, Surrey Now-Leader, Daily Hive , Investing News Network and Rach F1.

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