It is Vodafone Idea vs Reliance Jio in the great Indian telecom battle

Pedestrians use smartphones at the Nehru Place IT Market in New Delhi, India. Photographer: Sanjit Das/Bloomberg

Not very long ago, India had a booming telecom industry, with a dozen operators battling for market share in this billion user market.

But three years ago, Reliance Jio entered the sector which rock-bottom tariffs. A brutal tariff war started, which kicked several operators out of the race to provide wireless services and left many with battle scars. Today, just two other private operators, Bharti Airtel and Vodafone Idea are left to compete with Jio.

Earlier this week, Jio overtook rival Bharti Airtel to become the country’s second-largest operator in terms of mobile phone subscribers.

Vodafone Idea retains top spot in terms of subscriber base.

But if you compare India’s number one and number two players on metrics like profitability, revenue, 4G data users and the growth trend of the operators’ average revenue per user, the results that emerge boggle the mind.

For starters, Vodafone Idea, with the largest user base, made a net loss of 4,874 crore in the June quarter, while Jio made a profit of 891 crore. Both companies have priced mobile services at almost similar levels. To be sure, Vodafone Idea is in the midst of a merger integration exercise. The company believes that it is delivering on its stated strategy although the benefits are not yet visible in its topline. It also expects better financial performance going forward. But that depends on when tariffs improve in the market, and that call is clearly in Jio’s hands.

Take a second metric – revenue. Despite more subscribers, Vodafone Idea, which posted revenue of 11,269.9 crore, lags behind Jio which posted revenues of 11,679 crore in the June quarter. Its other rival, Bharti Airtel, will announce its results on 1 August.

Third, Vodafone Idea had 84.8 million 4G subscribers as of 30 June. However, in comparison, Jio has 331.3 million 4G subscribers. Then again, Vodafone Idea’s subscriber base is a mix of 2G, 3G and 4G while Jio is a 4G-only operator.

The fourth metric is the most interesting. While Vodafone Idea’s average revenue per user is steadily climbing, Jio’s is dropping.

After Vodafone Idea rolled rout monthly minimum recharge plans for subscribers to stay on its network, its shrinking subscriber base has led to an improvement in average revenue per user (Arpu) to 108 in the June quarter, from 104 in the March quarter, 89 in December and 88 in September.

Average revenue per user is an operator’s total revenue divided by total subscriber base.

Jio, on the other hand, has shown the opposite trend for the last 6 quarters. Jio’s ARPU for the June 2019 quarter was at122, down from 126.2 in the March 2019 quarter and 130 in the December 2018 quarter. It was at its peak of Rs154 in the December 2017 quarter.

A declining ARPU means subscriber additions on the network outpace its growth in revenue. In other words, every incremental Jio user contributes less to the total revenue and for Vodafone Idea the quality of the user base is improving.

A clear picture of who wins this telecom war will emerge only when the dust settles in the battleground. Till then, customers can sit back and enjoy cheap data tariffs.

This article was first published on livemint.com

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.