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RJio Builds Customer Base at Rivals' Cost

Gagandeep Kaur

Reliance Jio was the only service provider to gain new mobile customers in September, according to new data published by India's telecom regulator.

The operator's recent growth appears to have come at the expense of its older rivals. While it picked up 13 million subscribers in September, to give it 252 million in total, Bharti Airtel Ltd. (Mumbai: BHARTIARTL) lost 2.3 million mobile subscribers and the two operators merging to form Vodafone Idea lost around 8 million.

The overall market added just 2.4 million customers, according to the Telecom Regulatory Authority of India (TRAI). "The number of telephone subscribers in India increased from 1,189 million at the end of August 2018 to 1,191.4 million at the end of September 2018, thereby showing a monthly growth rate of 0.2%," says the TRAI report. All telcos apart from Reliance Jio (RJio) recorded a drop in the number of subscribers.

The data points to the appeal of RJio's low-cost services and products, including the JioPhone, an inexpensive 4G handset that is aimed at 2G customers who would not previously have been able to afford a smartphone upgrade.

The JioPhone has clearly helped RJio to make inroads into the rural segment, which today accounts for a significant proportion of its customer base. A tie-up with Facebook could support further expansion in this market: The two companies are working together to educate rural users on the use of WhatsApp and other Internet services.

The risk for RJio is that rural growth makes little difference to company profits: Many customers in these communities have stuck with their original providers and are using RJio as a "secondary SIM."

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

But the incumbents are clearly under pressure and face the growing problem of "inactive" customers on their networks. Their frustration became evident when Airtel and Vodafone Idea launched mandatory recharge schemes in October. Typically, a dual SIM subscriber spends a miniscule amount on recharging (as little as 10 Indian rupees ($0.14)) to keep numbers alive and continue to receive incoming calls. With mandatory recharging, Airtel and Vodafone Idea, which together serve around 250 million dual-SIM subscribers, require any customer to spend at least INR35 ($0.50) at the end of a monthly recharge cycle.

If customers forget or are unable to recharge, incoming calls are blocked. But the operators' scheme could backfire: A customer might simply decide the mandatory fee is too high to bother maintaining a mobile number.

If the strategy pays off, it could boost average revenue per user for Airtel and Vodafone Idea. The danger is that it drives more customers into the arms of RJio.

— Gagandeep Kaur, contributing editor, special to Light Reading

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