CHENNAI: If Reliance Jio’s first few years of existence were an era of near-unchallenged dominance, that changed in the financial year just gone by. FY21 saw Bharti Airtel shrug off the AGR-related millstone around its neck and begin beating Jio in the most fundamental numbers game in telecom: user
additions. But key metrics disclosed for the fourth quarter of FY21 (ended March 2021) indicate a resurgence in Jio’s subscriber acquisition and analysts expect the tussle for market dominance to get hotter.
While the latest subscriber data from the Telecom Regulatory Authority of India (TRAI) show Jio beating Airtel in terms of wireless subscriber additions in February for the first time in six months, fourth quarter releases also show that Jio has pipped Airtel in terms of overall net user additions for the period — at 15.4 million versus 13.4 million. Both Jio’s and Airtel’s revenues fell compared to the previous quarter, primarily driven by the removal of the Interconnect Usage Charges (IUC) system. Airtel’s from Rs 26,517.8 crore to Rs 25,747.3 crore, and Jio’s from Rs 22,858 crore to Rs 21,650 crore.
However, analysts note that Airtel’s dip raises some concerns even though “underlying fundamentals are strong”. While its Average Revenue Per User (ARPU) remains higher than Jio’s for the wireless segment at Rs 145 against the latter’s Rs 138, it recorded a steeper fall compared with the previous quarter. At the end of Q3FY21, Airtel had an ARPU of Rs 166 against Jio’s Rs 151. According to Airtel’s statement, if its ARPU was adjusted by removing IUC from the equation, the decline is marginal—from Rs 146 in Q3FY21 to Rs 145 in Q4FY21.
A senior analyst noted, however, that while the removal of IUC had been expected to impact Jio’s ARPU rather sharply, Airtel’s APRU decline had been “a mild surprise... since it was thought to be a net-payer of IUC fees unlike Jio”. “The lower ARPU is disappointing in the backdrop of strong 4G subscriber additions,” Motilal Oswal said in a note.
One factor that impacted Airtel’s numbers were higher network expenses, especially since it added a record 8,300 towers and diesel costs shot up over 10 per cent. “But this will work out to their advantage going forward, because it increases their subscriber capacity and enhance service quality,” said an industry executive, “It puts Airtel in a strong position to accelerate user additions”.
For Jio, the headwinds from farmers’ protests have declined and the new JioPhone offerings have given user numbers a solid boost. Analysts expect it to sustain the momentum in user additions—helped along not just by the new JioPhone packages, launched only late in February this year, but also its soon-to-be-launched low-cost smartphone. Goldman Sachs, for instance, expects the smartphone to help keep Jio’s subscriber momentum elevated.
15.4 mn Jio’s net user addition in Q4
Rs 21,650 cr Jio’s revenue as of March’21
Stage set for 5G
Both Airtel and Jio have already begun working on 5G product demos
In February this year, Airtel announced the successful demonstration of its live 5G services over a commercial network in Hyderabad
Jio is working on an indigenously developed 5G network