RJio Slowdown Offers Hope to Airtel, Vodafone
Reliance Jio, India's newest service provider, has recently witnessed a sharp fall in subscriber additions as well as a drop in the number of active subscribers to its service.
Despite launching services as recently as September, Reliance Jio already had a market share of about 9.5% by April, according to Telecom Regulatory Authority of India (TRAI) data. Yet while this is a commendable achievement for a new operator in a mature market, RJio's loss of momentum is clearly a cause for concern.
Controlled by Indian billionaire Mukesh Ambani, RJio managed to pick up as many as 100 million customers within five months of entering the market. It did that mainly by offering Indian consumers free voice services for life as well as free data services over the first three months (although this offer was later extended for another three months). Once it began charging for services, however, its number of subscribers dropped to 72 million.
The pace of subscriber growth has now fallen for several months in a row. In January, the operator picked up 18 million customers, but net additions were just 10 million in February and 5.9 million in March. In April it captured fewer than 3.9 million. What is even more worrying than this decline is the drop in the percentage of active subscribers to RJio's service. According to a recent report from Goldman Sachs and ICICI Securities, RJio added just 400,000 active subscribers in April, having gained about 16 million in September and October last year.
A key reason for the drop in active subscribers is that many bought RJio SIM cards purely to take advantage of the free offers and promptly stopped using the operator's service when they had to pay for that privilege. Although tariffs continue to be minimal, RJio's initial allure seems to be diminishing.
Indeed, only 18% of RJio's subscribers use their connections as a standalone SIM, with the rest using the service as a secondary one, says Velocity MR, a market research agency. This is also evident in the mobile number portability (MNP) data released by TRAI, which shows that the number of subscribers asking to port their phone numbers remained static even after Jio's launch. Nearly 6 million subscribers submitted MNP requests in March 2017 and 4.96 million did so in April 2017. In the two months before RJio's launch, there were 4.91 million MNP requests in July 2016 and 5.1 million in August.
Although RJio continues to attract more customers than any of its rivals on a monthly basis, these metrics should offer encouragement to its longer-established rivals, the biggest of which are still attracting customers (market leader Bharti Airtel Ltd. (Mumbai: BHARTIARTL) gained 2.8 million in April while number-two player Vodafone India captured another 700,000). The numbers suggest that all is not lost for India's mobile incumbents.
— Gagandeep Kaur, contributing editor, special to Light Reading