Is Reliance Jio juggernaut finally losing steam?
Mukesh Ambani-owned Reliance Jio may have been great news for customers, but it has created plenty of troubles in the telecom industry. The company's strategy to hand out freebies to win over customers caught the competition by surprise, resulting in heavy losses for established players like Bhati Airtel, Vodafone, and Idea.
Since its launch in September 2016, Reliance Jio has rolled on like an unstoppable machine, capturing a user base of more than 100 million customers in a matter of months. However, the latest monthly data released by the Telecom Regulatory Authority of India (TRAI) suggests the juggernaut is finally losing steam.
Decline in growth a cause for concern?
As per a report released by the UBS Securities Asia based on the monthly subscriber data released by TRAI for March, Reliance Jio's attractively priced 4G mobile service scheme Prime is not bringing in nearly enough users to the telecom provider as it would have hoped.
TRAI data reveals that Jio added only 5.8 million broadband consumers in March compared to February (12.2 million) and January (18.48 million) user additions.
It further goes on to add, "The March momentum favours incumbents, Jio Prime not driving demand pick-up. We are surprised to see lack of acceleration in March since Jio Prime offer was announced in the month. April was the first month of Jio's paid services and would offer further insight into customer conversion and migration from incumbents to Jio."
The data will come as bad news for Jio, as it sheds light on a concerning development. Analysts for months have expressed fear of Jio losing out to the competition after its welcome schemes and offers finally come to an end. However, the company losing steam even before its paid services kick in, hints at Jio's spell of freebies finally being broken, and users seemingly rejecting it for its below par services.
Airtel, Vodafone making recovery
Even as Jio's "sustained predatory pricing" continues to bleed out its competition dry, with the country's largest telecom operator Bharti Airtel on Monday (May 22) reporting its lowest quarterly profit in four years as its net earnings fell 72 per cent in January-March, there still remains hope for its competition.
Latest numbers hint at consumers finding their way back to the arms of older telecom players who finally look to be on the brink of turning a corner post a difficult period of losses.
The numbers from March reveal that Jio's closest rival Bharti Airtel's added over 2.99 million customers. Idea's tally grew by 2.09 million customers, while Vodafone also added 1.83 million new connections in March.
As UBS' report points out, the data for the coming months of April and May will draw a clearer picture of what the future holds for the telecom wars, but current data does point to a much brighter future for Jio's competition.
"While the data for April and May will be more significant given Jio has started charging since April, overall trends suggest Airtel continues to hold a firm footing in the Indian mobile market with key operating metrics outperforming peers. Vodafone and Idea have also shown recovery in March after under-performing in January and February."