Reliance Jio will find it tough to meet 100 million target: brokerage report
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Mukesh Ambani’s ambitious goal to sign up 100 million customers for Reliance Jio Infocomm Ltd by year end may be tough to achieve due to slower subscriber additions than required and faces the risk of mass desertions once the free trial period is over, a brokerage report said.
“The run-rate of SIM card sales since the launch of the welcome offer is 1 lakh per day. With addition of more distribution channels (e.g., modern and mom-and-pop stores), our channel check indicates the run-rate to go up 3-4x,” Mumbai-based brokerage firm Motilal Oswal Securities Ltd said in a statement.
On 1 September, Ambani, chairman of Reliance Jio’s parent Reliance Industries Ltd, set a target of acquisition of 100 million customers on Jio network “in the shortest possible time, and set a world record”, aiming to cover 90% of India’s population by March 2017.
Reliance Digital stores across the country are struggling with demand for Jio SIM cards, with waiting period for some extending to almost a month. Since 5 September, the date of Jio’s commercial launch, people have queued up in front of stores from early morning. Incumbent telecom operators are expected to counter Jio’s aggressive tariff plans with their own strategies.
According to the brokerage, considering three to four times growth in daily subscriber addition from the current level of 1 lakh, monthly addition works out to 9 million, leading to about 36 million subscribers by end of December.
The report said that by adding 36 million subscribers by year end, Jio will reach a user base which is about half the size of smaller telcos such as Reliance Communications Ltd, Tata Teleservices Ltd and Bharat Sanchar Nigam Ltd (BSNL).
An email sent to a Jio spokesperson seeking comments remained unanswered till press time.
Aliasgar Shakir and Jay Gandhi, analysts at Motilal Oswal, also said that it will be difficult to retain customers once the welcome offer, where the services are entirely free, expires.
“It will be interesting to see if RJio is able to retain its subscribers after the end of the welcome offer. Based on our channel check, there could be about 30-40% retention, which implies about 10-15m subscribers,” report stated.
The current subscriber base of Jio is 5 million and Jio SIM cards are only being distributed through Reliance stores.