Reliance Jio may overtake Vodafone Idea & Airtel to become India’s largest telecom firm by 2018 year end

According to Livemint, Reliance Jio may soon emerge as the leading wireless telecom company in India. Reliance Jio’s net revenue may have crossed Bharti Airtel Ltd’s wireless revenue in India last quarter, according to analysts at Kotak Institutional Equities Research. If the Reliance Industries Ltd (RIL) unit maintains the momentum, then it may emerge as the largest telecom company as early as the end of 2018.

“We expect Bharti Airtel’s net India wireless revenues (reported gross wireless revenues less estimated gross interconnect revenues) to be around ₹87-88 billion for 2QFY19. Reliance Jio’s reported revenues of ₹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.

“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 said.

Reliance Jio’s focus remains on expanding its subscriber base but the ban on Aadhaar-based e-KYC can affect this. This, however, is seen as a temporary phenomenon. The trends indicate continued tough times for incumbent telecom companies which have to step-up capital expenditure (capex) while dealing with price erosion.

Reliance Jio continued on its strong growth trajectory with the telecom company adding 3.7 crore subscribers in the September quarter. Graphic: Mint

“We expect competitive intensity to remain elevated over the next 9-12 months as fight for subscriber share continues. Reliance Jio, over the weekend, introduced 100% cashback for all packages and various players have been tweaking with pricing and packs,” Jefferies India Pvt. Ltd said in a 19 October note. Further, the incumbents, given their weakened financial position, are lagging in capex, which is crucial for product offerings and customer retention.

Reliance Jio continues to be on an accelerated capex drive, spending around ₹330 billion in H1FY19 (Q2 spend ₹160 billion) which is ~70% its own FY18 capex and is largely equivalent to the combined capex spend of the remaining two incumbents (Bharti Airtel, Vodafone Idea) put together in FY18,” SBICAP Securities Ltd said in a note. “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.”

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In the second quarter of this fiscal year, Reliance Jio had a significant capex of around Rs 160 billion, although it was 6 per cent down from the previous quarter. Analysts expect the high capex to continue for another two quarters or so, post which the company would shift its focus to the broadband business.

The telecom operator is on track to achieve the 99 per cent of population coverage target within FY2019. Jio attributed the higher capex in the first half of FY19 to expanding mobility networks, which is in the last phase and will subside in the next one-two quarters.

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India consumers are rapidly upgrading to 4G feature phones, led by the JioPhone, that offer a much richer data and video experience, forcing plain handset makers to review their production plans.

CyberMedia Research (CMR) data shows that market share of 2G phones has plunged 17 percentage points in just six months to 30% in the quarter ended June, while Reliance Retail’s 4G variant, called JioPhone, increased its market share by 9 percentage points in the same period to 27%

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3 thoughts on “Reliance Jio may overtake Vodafone Idea & Airtel to become India’s largest telecom firm by 2018 year end

  1. India Government frees spectrum for wifi, 5G services in 5 Ghz band from license

    The government has freed a set of spectrum in the 5 Ghz band from licensing for providing Wifi and partially 5G services by telecom companies. No permits would be required for the spectrum in the range of 5150-5250 megahertz band, 5250-5350 Mhz and 5725-5875 Mhz, according to an official notification.

    “No licence shall be required under indoor and outdoor environment to establish, maintain, work, possess or deal in any wireless equipment for the purpose of low power wireless access systems ..

    https://economictimes.indiatimes.com/industry/telecom/telecom-news/government-frees-spectrum-for-wifi-5g-services-in-5-ghz-band-from-licence/articleshow/66322128.cms

  2. How do you see the fourth-generation (4G) technology coverage presently, and what are the clear benefits for consumers and the country when it reaches to optimal level?
    With operators’ coverage reaching over 90% of the Indian population, India will be clearly connecting the unconnected, and actually making technology accessible to everyone. Covering the nation with accessible, affordable wireless broadband is just the first part of fulfilling that vision and India’s rapid acceleration of internet adoption is unparalleled as the country skyrocketed into the digital era. Pundits had said India is not ready to adopt broadband internet, India has not only adopted but enthusiastically embraced mobile broadband. This is just the start of the telco disruption and accelerated consumer mobile broadband and digital adoption.

    What is your coverage percentage currently?
    We have covered nearly 95% of the population and will reach 99% of India very soon.

    https://telecom.economictimes.indiatimes.com/news/reliance-jios-yet-another-5g-disruption-in-the-making/67990588

  3. How do you see 5G ecosystem maturity in India?
    5G ecosystem is still evolving and the first true commercial 5G networks and devices to come into service starting 2020. What happens in 2019 in 5G would be more targeted and fixed wireless based and not of any scale. The operator ecosystem – including devices, infrastructure, regulatory, spectrum, and OEMs, are not yet ready for large scale and mass deployment. We will continue to see various targeted use cases explored and narrow deployments in the coming year.

    Jio demonstrated various live use cases and the ongoing 5G-driven trials involving facial recognition, smart agriculture, connected public digital centers supporting 3D printers and remote healthcare, intelligent drone security, and connected and remote-controlled vehicles all of these and more are being the potential possibilities with 5G technology.

    It is for the first time that two evolutionary mobile technologies would co-exist and interoperate. We will see a generation of devices that simultaneously connect to both 4G and 5G. 5G is complementary to 4G, and not an immediate replacement, which is a huge benefit to operators who have already invested significantly in 4G. In fact, most operators in India are still building out their 4G network and just launching their VoLTE based voice network.

    5G promises to deliver ultra-fast data services but affordability is a critical area when it comes to markets like India. Is cost-effective spectrum a way forward? Your views?
    If services like Augmented Reality, Virtual Reality, and HD video content are given to people at affordable rates, people will consume and will be willing to pay for the data. As more spectrum becomes available, broadband prices will become even more prevalent and affordable enabling operators to focus more on high-quality service-driven business models. The cost per Megahertz pop in India is also significantly higher than other markets making it challenging for operators to sustain high quality and high-performance broadband. The higher cost of spectrum definitely isn’t helping the industry while spectrum capacity constraints limit the quality of service, availability, and experience.

    How do you see device ecosystem readiness in the country with 3300 Mhz – 3600 Mhz band spectrum to be auctioned for 5G services?
    5G will give higher speed to consumers in places that cannot be served by fiber. But the device ecosystem will continue to mature and possibly have 2020 as the inflection point by when the ecosystem will begin to start having significant growth. The device ecosystem is critical to ensure that operators aren’t sitting on spectrum waiting for affordable devices to show up in the market. Regarding 3.5 Ghz spectrum, those could be leveraged smartly by operators to accommodate both 4G and 5G. Based on reports it’s evident that Qualcomm and Intel will be showcasing LTE and 5G devices on 3.5 Ghz band. India clearly needs more spectrum in all bands just because of the digital adoption and the large number of new customers being added to data services every single day.

    https://telecom.economictimes.indiatimes.com/news/reliance-jios-yet-another-5g-disruption-in-the-making/67990588

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