Reliance Jio May Be Losing Steam as Free Services End

Reliance Jio Infocomm Ltd’s rivals may have been able to counter its onslaught and stand to gain after the country’s newest telecom operator ended free services.

Bharti Airtel Ltd, Vodafone India Ltd, and Idea Cellular Ltd have controlled the churn ratio as well as added new active subscribers, a report by Kotak Securities said. The churn ratio indicates the percentage of subscribers who discontinue their subscriptions, while active subscribers indicate customers using the network.

Kotak Securities ReportCustomers lured by Jio’s free offerings continue to stay active on incumbents’ networks and those who have taken a Jio SIM continue to use the incumbent networks.

Reliance Jio started in September in 2016 by offering free services. The company has since gained more than 10 crore subscribers, but the number of active subscribers is still below the industry standards.

(Photo: Bloomberg | Quint)

Although Reliance Jio has been adding more customers than its peers, the pace of addition has slowed down due to limited fourth generation (4G) devices.

(Photo: Bloomberg | Quint)

During the period when Reliance Jio was offering free services, customers did shift usage from the top three telecom operators, hurting their average revenue per user. But with Reliance Jio starting to charge from 1 April, rival operators do stand a chance to gain, according to the Kotak Securities report.

(Photo: Bloomberg | Quint)

Bharti Airtel, Vodafone India and Idea Cellular reported a 7-9 percent drop in their average revenue per user in the third quarter ended December of financial year 2016-17.

The trend is likely to continue in the fourth quarter as Reliance Jio was providing free services till March 2017. All the three companies are yet to report their earnings for the fourth quarter of FY17.

(This story was first published on BloombergQuint)