Reliance Jio is sprinting to add more new subscribers than all of its major rivals combined. The company added ten times more users than rest of the players in July and has been consistently adding more users than rivals in the past few months as well. At this pace of user addition, Jio can dethrone Vodafone Idea Pvt Ltd to become the largest telecom operator in the country.
If Reliance Jio maintains the momentum then it could emerge as the leading telecom player in the country as early as the end of 2018, say analysts at Kotak Institutional Equities Research. In the last quarter, Reliance Jio’s net revenue might have surpassed Bharti Airtel’s wireless revenue in India. The analysts also note that Jio remains focused on expanding its subscriber base but the ban on Aadhaar-based e-KYC is said to affect in near term.
“We expect Bharti Airtel’s net India wireless revenues (reported gross wireless revenues less estimated gross interconnect revenues) to be around Rs 87-88 billion for 2QFY19. Reliance Jio’s reported revenues of Rs 92.4 billion are net of interconnect revenues as the company adjusts interconnect revenues in the interconnect costs line,” analysts at Kotak Institutional Equities Research said in a note, obtained by Livemint.
“If Bharti does not report a material beat on our estimated wireless revenues for the quarter, Reliance Jio has perhaps crossed Bharti on net India wireless revenues to become #2 after Vodafone Idea. If the current trends continue, Reliance Jio will likely become #1 on net revenues as early as 3QFY19E,” the note adds.
Livemint reports citing analysts at Kotak Institutional Equities Research that the trend shows continued tough times for incumbent telecom companies in the country. These companies are expected to increase their capital expenditure in order to deal with price erosion.
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According to Jefferies India Pvt Ltd, the competitive intensity will remain elevated over the next 9 to 12 months and these telecom players will continue to fight for subscriber share. “The scale of investments and the current profitability differential suggest that Reliance Jio is unlikely to relent till it achieves a meaningful market leadership in terms of revenue market share,” SBICAP Securities said in a note.
While Reliance Jio is adding new subscribers at a faster pace than its rivals, the company is also spending more to bring in those subscribers. Due to elevated costs of user acquisition, the company is yet to report profitability on net earnings. The analysts believe that the company will continue to focus on new users without any need for immediate rationalization in its price.