HOME > BUSINESS > Reliance Jio helped India save Rs 18,000 cr, but rivals took the hit

Reliance Jio helped India save Rs 18,000 cr, but rivals took the hit

Free services from Reliance Jio, the telecom services arm of Reliance Industries, brought down the amount of money paid by telecom subscribers in India by about Rs 4,400 cr in just the last three months of 2016, an analysis of the sector data revealed.

The numbers indicate that the company’s free offers have helped Indians save a total of around Rs 18,000 cr so far.

GRADUAL IMPACT

Till October, the impact of Jio was negligible due to its low subscriber base. At the beginning of the October, for example, the operator had only 16 mln subscribers.

But it soon started adding subscribers at a tremendous pace.

It added 56 mln in the next three months, taking its total users to 72 mln by Dec 31.

However, it did not charge a single rupee from any of them.

Because of this, the total money paid by telecom subscribers in India to various telecom service providers fell to Rs 37,284 cr for the three months starting October compared with Rs 41,681 cr in the preceding three months (July to September).

In fact, the actual savings to consumers was probably higher than what these two numbers suggest as overall revenue of existing operators started falling from July onwards, when they slashed their prices in anticipation of the September launch of Jio.

As a result, if one compares the revenue generated by these operators in Oct-Dec of 2016 (37,284 cr) to what they generated in Apr-June (44,754 cr), the savings for the consumers is around Rs 7,500.

The savings in the three months further rise to around Rs 7,900 cr or so when adjusted for the natural growth of subscribers in this period.

Though subsequent industry revenue numbers — for January to March 2017 — are not available, it is likely that Jio dented rivals’ revenue by another Rs 9,000-11,000 cr this year due to its increased scale of operations. This impact takes into account both the direct loss of volumes as well as price corrections made by rivals since mid-2016.

In all, therefore, existing players like Bharti Airtel, Idea Cellular, Tata Teleservices and others lost the chance to get about Rs 18,000 cr from their subscribers from October last year to March this year.

While this may be good news for consumers, it means that the companies’ finances have come under pressure, forcing the TRAI to intervene.

ARPU HIT

The fall in revenue had a direct impact on the average amount paid by each subscriber to their telecom provider, also known as ARPU.

The average amount of money spent by one telecom consumer in India fell by Rs 20 in the last three months of 2016 to just Rs 111.63 per month. Compared to Apr-June period — just before price cuts by incumbent operators — the fall was of Rs 30, a decline of 21%.

Chances are that by the end of March 2017, the average revenue paid by a single subscriber in India is likely to have fallen below Rs 100 per month — a decline of 30% over a period of nine months.

GOVT REVENUE IMPACTED

Even though subscribers may have saved around Rs 7,900 cr in the second half of 2016 due to Jio’s free services, the government also lost around Rs 900 cr of revenue in the form of lower spectrum usage charges and license fees due to this.

Included in this is a fall of Rs 622 cr in the form of lower spectrum usage charges and license fees in the Oct-Dec period.

However, given that consumers are likely to have spent their saved amounts on some other service or product, most of the revenue lost in telecom would reappear in the form of higher revenue from other products and services.

RCOM, TATA HIT MOST

The biggest victims of Reliance Jio’s free services seemed to have been the data-focused CDMA operators such as Sistema (MTS), Reliance Communications and Tata Teleservices, even though Bharti Airtel was also hit hard.

Sistema’s adjusted service revenue fell 27% in the last three months of 2016 compared to the preceding three months to Rs 274 cr .

 

RCom’s revenue fell 14% to Rs 968 cr and Tata Tele’s service revenues fell 13% to 2,209 cr.

Among the large operators, the biggest impact was on Bharti Airtel, whose adjusted access revenue fell 8% in the final three months of the year to 11,495 cr. Airtel accounted for nearly Rs 1,000 cr out of the 4,400 cr of revenue decline that the industry saw in the final three months of the 2016.

In comparison, Vodafone’s revenue fell only 5.1%, while that of Idea Cellular declined by only 4.9%. BSNL saw a revenue decline of 4.2% and Telenor 1.8% (see chart below).

 

Follow ULTRA.news
RCom lenders get first round of bids for spectrum, fiber and assets – report The lenders of Reliance Communications have got initial bids for the company's assets from the three big telecom companies in India, CNBC TV18 reported, quoting banking sources.The Anil Ambani Group company is under the control of its lenders after it ran aground due to high...
Airtel’s new 4G pack is 30% cheaper than Reliance Jio Bharti Airtel has unveiled two new publicly available 4G plans with 2 GB and 3 GB of data allocation per day, along with free voice and SMS benefits.These plans are unique as currently no other operator offers 2GB or 3G per day at these price levels.Airtel has priced its ...
Bharti Airtel offers cashback on Intex 2GB RAM models, others Continuing with its tie-ups with hardware brands, Bharti Airtel announced three more 'cash back' models from Intex, including one with 2GB of RAM.The cheapest will be the Intex Aqua LIONS N1, priced at Rs 3,149 and eligible for for a cash back of Rs 1,500 over a period of th...
GST complaints coming mainly from tax-evaders – Adi Godrej Adi Godrej, chairman of one of India's largest manufacturing and real estate groups, said most of the complaints about the new Goods and Services Tax is coming from businesses that have been built on a model of tax evasion."The complaints about the GST are mainly coming from ...
RCom calls Fortuna PR litigation ‘motivated’ Reliance Communications said the liquidation case filed by Fortuna Public Relations Private Limited against it is "misconceived, premature and motivated by extraneous considerations."Media reports had sprung up saying that Fortuna PR had filed for liquidation of RCom to recov...
Bharti Airtel invests in e-publishing platform Juggernaut Bharti Airtel said it has acquired a strategic stake in Juggernaut Books, a popular digital epublishing platform.Telecom companies in India are busy building or buying content companies in an effort to offer their own content on their networks."The investment is in line ...
Vodafone offers 1GB/day for 84 days at Rs 509 Vodafone has unveiled five pan-India plans, the highlight of which is the new Rs 509 plan that gives 1 GB per day and unlimited calls for 84 days (12 weeks).The pack is priced only Rs 50 higher than the equivalent plan by Reliance Jio, which is priced at Rs 459.Before th...
Bharti Airtel denies violating Aadhaar norms Bharti Airtel today said it has not violated any norms set down by the UID Authority of India for the use of Aadhaar verification.Responding to a notice from the stock exchanges, the company confirmed having received notices from the UID Authority on alleged violations of no...
Will Reliance Jio launch Rs 199 plan with 1 GB per day for 28 days? A new plan being bundled with Xiaomi's new affordable plan, Redmi 5A, suggests that Reliance Jio could soon launch its first monthly unlimited plan priced at Rs 199.The plan, valid for four weeks, will give 1 GB of data per day, unlimited voice and access to Jio apps.The...
RCom says majority of lenders oppose China bank’s insolvency petition Reliance Communications, the embattled telecom service provider from the Anil Ambani stable, said a majority of its lenders opposed the move by China Development Bank to move ahead with insolvency proceedings on the company.“At a Committee of Financial Creditors Meeting on 2...
Exchanges seek clarification from Bharti Airtel on Aadhaar misuse charges Stock exchanges in India have sought a clarification from India's largest telecom company by revenue, Bharti Airtel, on a report that it was under investigation by a government agency for allegedly misusing customer data to open bank accounts in their names."(The) exchange ha...
Airtel launches VoLTE in Karnataka Bharti Airtel continued to expand its lead over Vodafone and Idea in terms of supporting 4G voice services by launching VoLTE or Voice over LTE services in Karnataka.The prices for VoLTE calls will remain identical to those of traditional calls.However, customers who us...
TRAI Net Neutrality recommendations are a win for Open Internet advocates India's telecom regulator TRAI has issued its recommendations on Net Neutrality in India.The recommendations are largely along expected lines, and prevent telecom companies from slowing down the Internet to ease the traffic of their video apps, messengers and other 'over-the...
Pantel Technologies buys Reliance Digital TV DTH Reliance Communications announced that Pantel Technologies, which sells the Penta brand of tablets in India, has purchased its Big TV DTH service.The agreement was signed with Pantel Technologies Pvt Limited and Veecon Media & Television Limited, the Anil Ambani group company...
ONGC, satellite operators worried about upcoming 5G spectrum auction in India ONGC and satellite operators in India have raised objections to the upcoming 5G spectrum auctions.An umbrella body of several satellite infrastructure organizations suggested that existing facilities that fall in the bands scheduled for the '5G auction' should be allowed to ...
Tata DoCoMo users get Airtel network, but not the tariff plans yet Bharti Airtel and Tata Teleservices said they have started moving customers of Tata DoCoMo to the Bharti Airtel network using what is called an 'intra-circle roaming' or ICR agreement.This essentially means that Tata Teleservices will continue to operate a network in a techn...
Reliance Jio arrests trend of declining net additions; user activity increases Reliance Jio, India's newest operator, added 5.94 mln subscribers in September, breaking a declining trend in net additions and taking the total subscriber number to 138.62 mln (13.86 cr).Even as the company increased its subscriber numbers, it was also able to reduce the p...
Vodafone launches Aadhaar verification via vans in Rajasthan With the central government breathing down the necks of telecom operators to link all connections with Aadhaar numbers, Vodafone has launched Aadhaar verification vans in Rajasthan to ease the process.The vans were initially launched with the purpose of easing the 4G SIM upg...
Vodafone increases data on 349 plan to 1.5 GB per day Following Idea Cellular and Bharti Airtel, Vodafone too has increased the data allocation on its Rs 349 plan to 1.5 GB per day from 1 GB per day.Over the last few days, Bharti Airtel and Idea Cellular too had increased quota by 50% to cope with competition from Reliance Jio....
After Reliance Jio, Idea offers 100% cashback on Rs 357 plan Idea Cellular, reportedly India's third largest 4G operator by volume, has started offering a 100% cash-back scheme even as the Cellular Operators Association has complained against such schemes.Similar cash back schemes have been announced by Reliance Jio in an effort to ma...