Telecom Diary: Jio continues to march ahead of rivals, Vodafone Idea on a shaky ground

According to an analyst note by Jefferies, Vodafone Idea’s fragile state could accelerate market share shifts towards Bharti and Jio.

Telecom Diary: Jio continues to march ahead of rivals, Vodafone Idea on a shaky ground
Mukesh Ambani

Ahead of the launch of the JioPhone Next on September 10, Reliance Industries has formulated a new offline retail strategy as it aims to ruffle the 2G mobile market.
The new strategy will enable Reliance Jio, which offers only 4G services, to tap the huge 2G feature phone users at around 250 million. Most of these users are part of rival telecom networks Bharti Airtel and Vodafone Idea.
The company is entering into a partnership with offline stores to offer mobile devices locked with Jio SIM apart from signing reverse handset bundling partnerships with handset firms including Vivo, Xiaomi, Samsung, Oppo, HMD Global, and iTel, etc. JioPhone Next, in partnership with Google, is being touted as an affordable 4G smartphone.

For the second consecutive month, Reliance Jio added the maximum number of subscribers, according to data from telecom regulator TRAI. Reliance Jio added 5.47 million new users in June, while Bharti Airtel added 3.8 million subscribers. While Vodafone Idea continues to lose users - it lost 4.3 million subscribers in June.

In the revenue market share (RMS), Reliance Jio is the only telecom operator to gain the share in the April-June quarter owing to strong consumer uptake and strong sequential growth in revenue from national long distance (NLD) services.

Jio reported 242 bps gains on-quarter, taking its RMS in the fiscal first quarter to 39.5%. While Bharti Airtel’s RMS fell 82 bps sequentially to 34.9% and loss-making Vi lost further ground on this score, its revenue share plunging 119 bps on-quarter to a modest 18.6% in the April-June period. RMS is a measure of overall telecom market leadership.

According to an analyst note by Jefferies, Vodafone Idea’s fragile state could accelerate market share shifts towards Bharti and Jio. Furthermore, Jio's healthy subscriber additions bode well for the tariff outlook.

On the other hand, the government is mulling a plan to allow telecom operators to pay Adjusted Gross Revenue (AGR) dues over 20 years. Any government bid to relax the AGR payment tenure needs to take into account the Supreme Court ruling, which mandated telcos to pay their dues over 10 years, through March 31, 2031. This was despite the cabinet having recommended a 20-year time frame to pay those dues.

The operators have been demanding a relief package for the industry. Vodafone Idea is struggling to survive owing to huge dues and unable to raise funds to meet obligatory and operational needs. Though, the government is not in favor of merging Vi with state-run player BSNL.

The board of Bharti Airtel though will meet on August 29 to consider and approve raising funds via equity, equity-linked or debt instruments, or a combination. The fundraising will further strengthen Airtel's balance sheet, and combined with a financially strong Reliance Jio, will add to the woes of cash-strapped Vi.

According to reports, internet giant Google is in advanced talks with Bharti Airtel to make significant investments.

If this deal goes through, it will be the second big investment for Google in the Indian telecom space. Earlier, it has announced an investment of Rs 34,000 crore in Mukesh Ambani's Reliance Jio Platforms.

Lastly, local and multinational smartphone makers said that mandating the local standard, 5Gi, for 5G deployment will severely hit the entire mobile phone manufacturing initiative of the Indian government and industry.

Technological research for 5Gi should be done so that the local standard gets seamlessly dovetailed in the global ecosystem and not run as isolated islands. The fragmentation of 5G standards into 3GPP’s 5G and TSDSI’s 5Gi will increase the cost of user terminals, thereby implementing the new technology that needs to be left to the market to choose the best and realistic options, according to India Cellular and Electronics Association.