Synopsis: Reliance Jio leads the telecom sector. According to a Jefferies analyst note, Vodafone Idea’s precarious position could hasten market share transfers to Bharti and Jio. In addition, Jio’s strong customer growth bodes well for the tariff future.
Reliance Industries has devised a new offline retail strategy in order to shake up the 2G mobile industry ahead of the launch of the JioPhone Next on September 10. The new plan will allow Reliance Jio, which only offers 4G services, to tap into the 250 million users of 2G feature phones.
The majority of these customers come from competing telecommunications companies Bharti Airtel and Vodafone Idea. Apart from striking reverse handset bundling relationships with handset companies such as Vivo, Xiaomi, Samsung, Oppo, HMD Global, and iTel, the company is partnering with offline outlets to offer mobile devices locked with Jio SIM.
The JioPhone Next, developed in collaboration with Google, is described as a 4G smartphone.
According to data from telecom regulator TRAI, Reliance Jio added the most subscribers for the second month in a row. In June, Reliance Jio added 5.47 million new subscribers, while Bharti Airtel added 3.8 million.
While Vodafone Idea continues to lose subscribers – the company lost 4.3 million in June.
Due to excellent consumer uptake and substantial sequential growth in revenue from national long distance (NLD) services, Reliance Jio is the only telecom operator to gain revenue market share (RMS) in the April-June quarter.
Jio’s RMS in the fiscal first quarter increased by 242 basis points, bringing it to 39.5%. While Bharti Airtel’s RMS declined 82 basis points sequentially to 34.9%, loss-making Vi’s revenue share fell 119 basis points on-quarter to a meagre 18.6% in the April-June period. RMS is a metric for overall telecom market dominance.
According to a Jefferies analyst note, Vodafone Idea’s precarious position could hasten market share transfers to Bharti and Jio. In addition, Jio’s strong customer growth bodes well for the tariff future.
On the other hand, the government is considering a scheme that would allow telecom companies to pay AGR dues over a 20-year period. Any attempt by the government to shorten the AGR payment period must take into account a Supreme Court order that required telecoms to pay their dues over a 10-year period, ending March 31, 2031.
This was despite the cabinet’s recommendation that the dues be paid over a 20-year period.
The operators have been urging that the industry be given some relief. Due to massive dues and an inability to acquire finances to meet mandatory and operational demands, Vodafone Idea is battling to stay afloat.
The government, on the other hand, is opposed to Vi joining with the state-owned BSNL. Earlier this week Airtel announced a rights issue to raise Rs. 21,000 crores.
Fundraising will help Airtel’s balance sheet, and when joined with a financially robust Reliance Jio, it will exacerbate Vi’s cash-flow problems.
According to rumours, Google and Bharti Airtel are in advanced talks about making large investments. If the deal goes through, it will be Google’s second major investment in the Indian telecom sector. It had already announced a Rs 34,000 crore investment in Mukesh Ambani’s Reliance Jio Platforms.
Finally, local and multinational smartphone manufactures have stated that requiring the local standard, 5Gi, for 5G rollout will significantly harm the Indian government’s and industry’s overall mobile phone manufacturing strategy.
It is necessary to do technological research for 5Gi in order for the local standard to be seamlessly integrated into the global ecosystem rather than operating as isolated islands.
According to the India Cellular and Electronics Association, the fragmentation of 5G standards into 3GPP’s 5G and TSDSI’s 5Gi will raise the cost of user terminals, making it more difficult to deploy new technology that should be given to the market to choose the best and most practical solutions.
