Reliance Jio, the Mukesh Ambani led telco has surpassed the Vodafone India to rank second in the telecom operators’ list as per Revenue Market Share (RMS). Reliance Jio’s extreme pricing techniques and an increased focus in the rural market has helped the telecom carrier in jumping to the second spot this fast. With this leap, the telco has grown closer to the top spot of Bharti Airtel. The telecom watchdog Trai broke the news which reported that Jio’s RMS went up by 253 basis points (bps) one-quarter to 22.4% at the end of the quarter ended June. The rise of the telecom operator has been exemplary in the telecom sector in a very short span starting in 2016 reports Economic Times.
While Reliance Jio’s RMS and subscriber base increased substantially, Vodafone’s data showed a decline in its subscriber base and RMD contributing to this exchange of spots. Vodafone’s RMS decreased by 175 bps to 19.3%, while partner Idea Cellular also showed a decline of 106 bps to register RMS of 15.4%. While these two telcos showed a sharp decline, Bharti Airtel thanks to its strong holding was able to better compete with the Mukesh Ambani led telco as it only showed a decline of 12 bps on-quarter, at 31.7%. According to the analysts, the fall in Airtel’s RMS was attributed to the cutting of charges on incoming international calls this quarter.
As per ICICI Securities who analyzed the Trai report, Jio seems to have entered a period of consolidation as highlighted by the data. Jio’s RMS has leapt from 11.6% in Q1 to 22.4% in Q2. Jio’s first challenge was to build a source of stable revenue, after effortlessly accomplishing this task, the latest telco entrant has set its sight on Airtel’s top position.
However, it is worth noting that Idea Cellular has performed better than expectations as the telco was gearing up to merge with the Indian wing of the British telecom giant, Vodafone India. When the merger completes after the NCLAT waves the clearance on the deal, the combined entity Vodafone Idea Ltd will take the top spot replacing Bharti Airtel, with a massive 35% RMS.
Adding up to their analysis, Analysts at ICICI Securities said Reliance Jio’s growth could be attributed to C-circles where its adjusted gross revenue (AGR) rose 17.2%. The company’s overall AGR saw a contribution of 17% from this sector. ICICI Securities also revealed that although Reliance Jio stood on the second number concerning RMS, it could only catch up to the 4th position when it came to active users. On analysis, it was found that Reliance Jio averaged 215million active user base at the end of June.
Speaking about AGR, both Vodafone and Idea Cellular could not stand the competition’s heat in the sector as both saw the decline to 7.1% and 5.2%. On the whole, the AGR of the telecom sector rose 1.3% on-quarter to Rs 32,000 crore with Reliance Jio being the major contributor to this rise.
Looking at the data, it is apparent that Reliance Jio is going to face new competition in the industry in the form of Vodafone Idea Ltd, while the leading telecom operator, Bharti Airtel will fight to save its spot.