Reliance Jio makes inroads in non-metro cities

Reliance Jio Infocomm Ltd. has been gaining revenue market share in non-metro cities, aided by increasing traction of its 4G-enabled feature phone JioPhone.

Adjusted gross revenue of Reliance Jio, which started a tariff war in the world’s second-biggest telecom market, rose 18 percent in non-metro cities, while growth remained stagnant in the three metro cities—Delhi, Mumbai and Kolkata—data released by the Telecom Regulatory Authority of India show.

The trend, however, was reverse for other two private operators—Bharti Airtel Ltd. and Vodafone Idea Ltd.

Adjusted gross revenue is calculated by deducting interconnect usage and other charges from revenue as provided by TRAI. The revenue market share is calculated using the adjusted gross revenue plus national long distance revenue, also considered to be a part of the core business.

The Mukesh Ambani-led telecom startup’s revenue market share continued to rise for the fourth consecutive quarter, narrowing the gap with market leaders—Vodafone Idea and Bharti Airtel. Reliance Jio’s growth came mostly at the expense of Vodafone Idea. More than one-fourth of the total telecom revenue is now earned by Reliance Jio.

Vodafone Idea has conceded nearly nine percentage points to Reliance Jio since the newest operator started reporting its numbers from the second quarter of the last financial year. Airtel lost three percentage points to Reliance Jio and less than one percentage points from state-owned Bharat Sanchar Nigam Ltd. during the period.

Smaller operators like MTNL Ltd., Aircel Ltd., Reliance Communications Ltd., Telenor India and Tata Teleservices have conceded close to 10.5 percentage to Reliance Jio during the period.

Telenor Communications Pvt. Ltd. and Tata Teleservices have since sold assets to Airtel and shut shops. Anil Ambani’s Reliance Communications Ltd. sold its assets to elder Reliance Jio. Reliance Communications is now a virtual network operator.

The price war started by Reliance Jio led to a sharp drop in average revenue per user earned by other telecom operators. That in turn has impacted their bottom line.

Vodafone Idea and Airtel’s adjusted gross revenue declined 6 percent and 3 percent, respectively, in the quarter ended September. Reliance Jio’s revenue grew 16 percent on strong subscriber addition.

Lower tariffs led to a drop in the telecom sector’s adjusted gross revenue in the last quarter. Total revenue dropped in four of the last five quarters. The second quarter is also considered to be seasonally weak for telecom operators.

Excluding national long-distance revenue, Reliance Jio’s revenue market share stands at 33.7 percent—the highest in the industry. That’s because unlike its peers, Reliance Jio hardly assigns any value to national long-distance revenue as it is a data-driven network.

This article was written by Soumeet Sarkar for the BloombergQuint.