RJio vs. Airtel – India's Changing Dynamics

The recent quarterly results of Bharti Airtel and Reliance Jio highlight the changing landscape of the Indian telecom industry. While Airtel continues to struggle, RJio's profit surged.

Now the second-biggest service provider in India, Bharti Airtel Ltd. (Mumbai: BHARTIARTL) posted a profit of 860 million Indian rupees (US$12 million) for its recent third quarter, ending in December 2018. Profits have fallen sharply from INR14.61 billion ($205 million) during the three months ending in September 2016, when Reliance Jio first launched its low-cost services.

But any profit, however small, would have come as a ray of hope for Airtel, which has racked up 11 straight quarters of decline. Another positive seemed to be the sequential growth in average revenue per user (ARPU), up to INR104 ($1.45) from INR100 ($1.40) in the preceding quarter. Yet Airtel's loss of about 49 million users last quarter, after it increased prices, seems largely responsible for that ARPU increase. Voice usage also rose to 726 minutes per customer, from 686 in the preceding quarter.

"Our simplified product portfolio and premium content partnerships have played out well during the quarter, translating into one of our highest ever 4G customers additions of 11 million plus," said Gopal Vittal, the managing director and CEO of Airtel's Indian and South Asian business, in a press release about results. "Our mobile data volume continues to expand, with a YoY [year-on-year] growth of 190%. We have deployed 24,000 broadband sites during the quarter."

The performance stands in contrast to that of RJio. Its profit for the same period was up 65%, compared with the year-earlier quarter, to INR8.31 billion ($116.8 million), as the young company continues to raise its profile in the Indian telecom industry.

For all the latest news from the wireless networking and services sector, check out our dedicated mobile content channel here on Light Reading.

Moreover, while Airtel flagged sequential ARPU growth, RJio saw ARPU fall to INR130 ($1.82) in the December-ending quarter, from INR131.7 ($1.84) in the preceding one. With the figure down from INR154 ($2.15) a year earlier, the indication is that most new subscribers on RJio's networks are low-revenue-generating customers. RJio added 32.7 million new subscribers in the quarter.

"The RJio family is now 280 million strong and growing on one of the world's largest mobile data networks," said Mukesh Ambani, the chairman and managing director of RJio's parent company, Reliance Industries. "We are similarly working on re-inventing the connectivity solutions market for homes and enterprise with our next generation FTTx services." Given the damage RJio has already done, that statement is a troubling one for RJio's rivals.

— Gagandeep Kaur, contributing editor, special to Light Reading