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Reliance Jio might have led to tariff wars, but it hasn't 'eaten' into anyone's market share

In 2016, India's top three telcos lost 0.5 percent market share on an average. What Jio has really done is grown the overall market at a good pace.

Reliance-Jio

TRAI has released its latest numbers which reveal that India’s newest telecom operator Reliance Jio ended 2016 with a 6.4 percent market share – which it achieved in four months after its rollout in September. On the surface, it might seem that Jio has “eaten” into the market share of incumbents Bharti Airtel, Vodafone and Idea Cellular. However, if we dig a little deeper, we see that the loss in individual market shares of India’s top three telcos is only marginal.

Sample this: Airtel’s market share fell to 23.58 percent in December 2016 from 24.07 percent a year ago. That’s a loss of 0.40 percent. Vodafone’s share dipped to 18.16 percent from 19.15 percent the previous year. That amounts to a loss of 0.99 percent. And, Idea’s share stood at 16.9 percent, down from 17.01 percent earlier. That’s 0.11 percent! Not only that, all three telcos added subscribers in the last year. Airtel added 22.56 million, Vodafone grew by 11.09 million, and Idea scooped up 8.52 million. ALSO READ: How Reliance Jio slashed mobile data tariffs in India by half: Mary Meeker Report

So, when it comes to subscriber base, Jio’s impact isn’t as devastating as it is on mobile tariffs. The top three players, Airtel-Vodafone-Idea, lost 0.5 percent market share on an average. What Jio has really done is grown the market by pulling in first-time mobile internet users with its freebies, and also by becoming a second mobile connection for mid-to-premium users. “Jio’s subscriber market share has increased from 6.4  percent in Dec ’16 to  9.6 percent in April ’17. The market trend indicates that most of the consumers are opting for Jio as a 2nd SIM option primarily for data usage. As a result, Jio’s contribution in net addition to subscriber base of India is 86 percent – the highest between Dec ’16 and April ’17,” says Satyajit Sinha, Research Analyst, IoT and Mobility at Counterpoint Research.

As a result, Jio managed to notch up 72 million subscribers by the end of 2016 and currently has more than 90 million paying customers. The 72 million signups happened in just four months (September – December) compared to Airtel-Vodafone-Idea combine’s 42.17 million in a year. In effect, Jio grew faster than Facebook, WhatsApp and many consumer tech companies in the world. Considering Jio has extended its Prime offer till March 2018, its growth might be unchecked this year too. ALSO READ: Reliance Jio 4G has spoilt Indian users even before launch, but we are not complaining

And incumbents need to worry about that (the future) more than what (0.5 percent) they have lost in 2016. Quite predictably, they are joining forces and the telecom industry is going through a major consolidation. With Vodafone merging with Idea, it will become the largest telco with 400 million subscribers and give Airtel – current market leader with 263 million subs – enough reasons to worry. Jio, meanwhile, could more than double its subs and surpass the 150-million mark by year-end.

But what happens after Jio’s freebies dry up in 2018? Can it continue its uninhibited growth? Can Vodafone-Idea and Airtel squeeze something back when it comes to data subscribers? Jio believes that 1 lakh crore of revenues will shift from voice to data in the next few years, and it is gearing up for precisely that. While Jio data is super cheap, prices are bound to go up once the honeymoon period ends in March 2018. How many subscribers will Jio end up retaining then? And will it actually start eating into the market shares of older telcos? Your guess is as good as ours.

  • Published Date: July 4, 2017 11:07 AM IST
  • Updated Date: July 4, 2017 3:45 PM IST