EkaLore has written about the operations of India’s Reliance giant, focusing on Reliance JIO and its role in the telecommunications/Internet/media marketspaces. This release includes an analysis of what JIO has accomplished with its efforts.
Reliance JIO and Bharti Airtel will continue to raid Vodafone VI and BSNL/MTNL for subscribers as growth has disappeared in net new additions. To grow subscriber counts by 20M in 2023, JIO needs to capture high proportions of switching rural and urban subscribers, dominate grabbing VI switchers, and stop Airtel’s urban growth. The key for JIO and Airtel to grow revenue and margins are capturing and retaining premium subscribers in 5G launch areas.
January 2023 reports showed India with 1,143.02M mobile users. Indian customers often subscribe to multiple services to take advantage of arbitrage service uses and media availability, so Net of Churn numbers are especially critical to understanding competitive standings. As evidence, 12.4M requests to transfer services (portability) were acted on in January 2023.
Reliance JIO, reported at the end of March 2023 for January, had 426.17M subscribers and now has 57M more subscribers than Alphabet-Google backed Bharti Airtel (368.89 subscribers). Net of churn, JIO has gained 5M subscribers since October 2022, with 1.65M (gross) added in January 2023. For context, Bharti Airtel added 1.28M subscribers. Vodafone VI lost 1.36M subscribers (net) in the same period as the competition. For broadband/wireline, JIO had 8.61M subscribers, Airtel had 6.9, and state-controlled BSNL had 7.08M. On the media side, JIO reports that their winning the Premier League rights saw 50M downloads in a single weekend of March 2023.
5G coverage nationwide rollouts are putting pressure on profit margins. With an expected network start in May 2023 (USD$11B bid in August 2022), media rights and delivery services saw a lower rate of margin improvement even as total profits from JIO rose 13% year-on-year quarter comparison to USD$574.8M. If JIO can maintain a modest growth of 5M subscribers per and hold margins against costs (there have been no price increases so far to improve margins with the competitive marketplace), this would produce margins of about USD$5.25 per subscriber per year (net of churn). Airtel is not rolling out until September 2023, and there is no schedule for VI’s rollout.
Activity rates seem to be predictive of future changes. Airtel leads these rates with 99.3% of its subscribers active on-network, JIO 92.56%, and VI only 87.15%. The peak active subscriber usage was 1,024.81M (VLR measured) of the 1143M subscriptions (89.66%) across all carriers. The net new subscriber number across networks was ~96,257. These numbers show that the dominant carriers will compete to capture weaker rivals’ subscribers as they expend huge sums for 5G and media.
The proportion of urban/rural usage is (54.87%/45.13%), and private/public services are (90.55%/9.45%). JIO and Bharti will likely continue to raid Vodafone VI’s subscriber base until VI counters effectively and raids government-controlled BSNL/MTNL’s small and declining subscriber base. JIO, Airtel, and VI have 96.46% of all wireless subscribers in the country. JIO and Airtel gained 1.51M rural subscribers, while VI lost 0.73M of those (net). There aren’t enough other likely subscribers in highly competitive urban areas to grow raw subscriber counts. To grow subscriber counts by 20M in 2023, JIO will have to capture a proportion of switching rural subscribers (dependent on service availability), a dominant proportion of switching urban subscribers from VI, and stop Airtel’s urban growth. To grow revenue and margins, capturing and retaining premium subscribers in 5G launch areas (likely with packages and new services) will be keys for JIO and Airtel. The competitive market space is seeing innovation (5G services) and media rights as keys to improving customer retention and future improvements in revenues and margins.
Our next piece will focus on investment in Reliance Jio by Meta/Facebook. You will find that post at the end of the week at www.ekalore.com/india-business
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