jio: Jio only telco to gain RMS in Q1 at Voda Idea cost: BNP

Reliance Jio is the sole telco to have gained revenue market share (RMS) in the fiscal first quarter, largely at the expense of loss-making (Vi) which ceded further ground to its stronger rivals, analysts said.

Jio gained 30 basis points (bps) sequentially, taking its RMS in the fiscal first quarter to 43.3% while Bharti

’s was flattish at 36%, said experts, analysing first quarter revenue numbers of the top private carriers.

Cash-strapped Vi’s June quarter RMS was down 40 bps to 20.6% despite the residual impact of price hikes, underlining its continuing operational weakness on the 4G services front.

RMS is a measure of overall telecom market leadership. A basis point is 0.01%.

“Jio gained RMS (43.3%) in 1Q, led by its industry-leading subscriber additions and average revenue per user (ARPU) growth, mostly at the expense of Vi, whose market share eroded to 20.6%,”

said in a note seen by ET.

In the April-June period, Jio outperformed peers with 4.7% sequential revenue growth, ahead of Airtel’s 3.4% and Vi’s 1.7% as the two older carriers were impacted by costlier mobile services and reduced smartphone sales.

BNP Paribas, though, said Vi has managed to narrow the difference in revenue growth rate versus competition over the last few quarters, amid slowing 4G subscriber additions overall.

For instance, Airtel’s sequential growth rate was ahead of Vi’s by more than 5% during 3Q21-1Q22, but its narrowed to a modest 1.8% in 1QFY23. Likewise, the gap between Vi and Jio’s revenue growth has tapered from a high 8.4% in 1QFY22 to 3% in 1QFY23, it added.

Analysts, though, expect Jio and Airtel to extend their respective RMS leads over Vi through their larger 5G investments in coming quarters, especially if the loss-making telco fails to close its long-pending Rs 20,000 crore external fundraise rapidly and bolster its mobile broadband operation.

This, they say, is since Jio expects its 5G services to have 20x more capacity and 10x higher speeds than 4G. Airtel too is confident about its competitive position in 5G, given its focus on quality customers, a strong enterprise business and digital capabilities and a consistent track record in driving 2G-to-4G conversions.

Vi’s management, though, dismissed worries, saying the telco’s C-band (3.3-3.67 GHz) spectrum holdings in its 17 priority circles are good enough to provide a quality 5G experience for several years. Vi also expects that access to E-band airwaves for backhaul will boost the quality of its 5G offerings without it having to set aside any cash for fibre-related capex spends for the next 5-to-10 years.

Analysts said 5G monetisation amid slowing 4G users growth would be crucial for all three telcos, especially as it’s difficult to predict if consumers would pay a premium for 5G, given the paucity of use cases.

“Part of the ARPU uplift (going forward) will come from telcos offering additional services to consumers leading to potentially more revenue sources, especially as prices are expected to remain low initially as focus will be on traction and coverage,” BofA Securities said.

Jio’s 5G coverage plan for India’s top-1,000 cities is ready while Airtel recently said its coverage plans for 5,000 cities and towns are ready. Vi is yet to announce detailed 5G rollout plans, but said that would hinge on various factors, including use cases, 5G handset penetration, demand from customers, capacity needs and competitive dynamics.

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