When Mukesh Ambani launched his telecom venture a year ago, it was based on one key assumption: India is a data starved country, and given the right pricing, demand for the commodity is almost insatiable.
Going by the latest industry data from the Telecom Regulatory Authority of India, he may be right on the money.
According to financial data for the three months from July to September 2017, the amount of wireless data consumed in India continues to grow in leaps and bounds even as the price of the data increased for the first time in several years.
The price of wireless data on 2G, 3G and 4G platforms rose by 21.74% to Rs 21.22 per GB during the three months from Rs 17.43 in the previous three months.
This was due to a 29% increase in data price implemented by Reliance Jio in July for its mass plan from Rs 3.68 per GB. Jio’s minimum price for data increased to Rs 4.75 per GB in July after it changed the price of its 84-day pack to Rs 399 from Rs 309 in early July.
Jio’s price increase helped lift average prices across the Industry. The average price of data in India rose by 21.7% in the period compared to the previous three months.
In the past, any increase in data prices has always been accompanied by a decline in consumption. However, this time, it was different as consumption increased by about 29% compared to the previous three months.
Average data consumed by a single user per month has been on the rise for several years now, but really zoomed after Jio came into the picture a year ago.
For example, average data consumption in India was 236 MB per month in July-September 2016, but zoomed to 884 MB in Oct-Dec 2016 due to the entry of Reliance Jio with its free network testing offer.
In the subsequent Jan-March quarter, there was further increase in consumption to 1006 MB per month as Jio extended its free services under a ‘Happy New Year’ scheme. This period also saw a sharp decline in data price to just Rs 19 per GB from Rs 164 per GB in Oct-Dec (see the graph).
However, growth was supposed to slow in Apr-June when Jio ended its freebies and started charging for its services.
However, surprisingly, TRAI data reveals that the growth in data consumption continued uninterrupted, rising 25% in Apr-June 2017 and a further 28% in July-September.
What remains to be seen is whether the price increase implemented in October had any big impact on consumption in the current quarter — October to December of 2017.
The operator is unlikely to increase prices further in the short-term.
During the July-September 2017, total wireless data consumed in India rose 29% to 5.43 million TB.
Out of this, 80% was consumed on 4G networks, 17.5% on 3G networks and 2% on 2G networks.
As for subscribers, Reliance Jio continues to lead the market with 32.29% of all internet connections in India, followed by Bharti Airtel with 21.97%.