Jio pips Vodafone to claim second biggest revenue share
27 August 2018
Mukesh Ambani’s Reliance Jio has overtaken Vodafone to become the second largest telco in terms of revenue market share in India, leapfrogging from its fourth position and closing the gap with the current market leader Bharti Airtel.
Financial data collated by sector regulator Telecom Regulatory Authority of India (Trai), Jio’s revenue market share has expanded 253 basis points (bps) quarter-on-quarter to 22.4 per cent at the end of the April-June quarter.
Reliance Jio Infocomm, which started off in September 2016, had a meteoric rise, having added over a 100 million subscribers in six months and touching a subscriber base of over 225 million by the first quarter of the current financial year.
Reliance Jio’s disruptive pricing has helped it clock high growth in rural markets and close the gap with market leader Bharti Airtel.
Vodafone’s revenue market share dropped 175 bps to 19.3 per cent, while partner Idea Cellular ceded 106 bps to register RMS of 15.4 per cent.
However, indicative of a sign of positive movement in AGR post consolidation in the mobile internet market, Bharti Airtel seemed to hold on with a market share of 31.7 per cent although its revenue market share fell 12 bps quarter-on-quarter.
In fact, Airtel’s RMS rebounded in the second quarter of FY19, according to an analysis of TRAI data undertaken by ICICI Securities. After initially starting out with low-cost tariffs, Jio seems to have turned a corner, and has entered a period of consolidation. Its RMS nearly doubled in Q1, from 11.6 per cent to 22.4 per cent. After establishing a channel for sustained revenue, Jio has set its sights on Airtel, which has long been the biggest telecom operator in the country.
According to ICICI Securities analyst, Jio’s strong performance in the June quarter can be attributed to C-circles where its adjusted gross revenue (AGR) rose 17.2 per cent and contributed 17 per cent of the company’s overall AGR.
Jio had previously overtaken Idea, but the company has performed strongly in the past quarter as its merger with Vodafone nears fruition. The combined entity will overtake both Airtel and Jio to become the biggest player in the telecom space with an RMS of 35 per cent.
The price war unleashed by Jio has led to attrition of customers from both Idea and Vodafone. The duo is awaiting a final clearance from the company law tribunal to formally complete the merger, which has overshot its June-end estimate.
For telecom companies, AGR is the revenue accrued through licensing services. While Jio might have outperformed larger peers in RMS terms, it still has to catch up in terms of its subscriber base. Jio had over 215 million users at the end of June, making it the fourth biggest telco in terms of active users.
Since its inception in September 2016, the nationwide 4G network has clocked over 14 per cent sequential increase in overall AGR to Rs7,200 crore in Q1 FY2019. Airtel’s AGR rose 0.9 per cent quarter-on-quarter to Rs10,200 crore. This figure is inclusive on 45 days’ worth of revenue from Telenor India, which was acquired by Airtel in May.
On this count, both Vodafone and Idea have not fared as well, with their AGR falling to 7.1 per cent and 5.2 per cent, respectively. Their combined AGR for Q1 stood at Rs11,200 crore. On the whole, the AGR of the telecom sector rose 1.3 per cent quarter-on-quarter to Rs32,000 crore.
The positive movement in AGR is indicative that the telecom is returning to growth, fuelled by a rise in mobile internet penetration. Jio faces renewed competition, with incumbent carriers expanding their 4G network to offer greater speed and bandwidth to lure customers.