Although the dust in the telecom battleground has settled largely with three players remaining, the sector is at the cusp of an anomaly with no clear market leader emerging on key growth metrics and no distinct industry hierarchy in sight.
Sample this. Vodafone Idea Ltd, India’s largest telecom operator by users and revenue market share, is also the only loss-making company among the three—posting a ₹ 4,970 crore loss in the September quarter. Reliance Jio, which had 252 million subscribers compared with Vodafone Idea’s 435 million as of end-September, made a profit of ₹ 681 crore in the same period.
The third player, Bharti Airtel, saw revenue from its India business fall 11% on-year in July-September. It lost 2.3 million users in September alone when Reliance Jio added 13 million.
So, who is the real number one telecom company?
“Vodafone Idea may have the most subscribers and revenue market share but clearly can’t be called the number one player or the industry leader if you look at all the parameters," a Mumbai-based analyst said, requesting anonymity.
The Cellular Operators Association of India (COAI) believes this abnormality is because of industry dynamics, which changed after the entry of Reliance Jio in September 2016. “The fundamental issue is that the industry has transformed from a voice-only network to an all-data network. The whole network has got more complex. As a result, we are wondering what are the right metrics to look at," COAI director general Rajan Mathews said.
The lobby group believes that in the current situation, the amount of data flowing on the network and the operator’s 4G coverage would be better metrics. “4G capacity will determine tomorrow’s leader. Who has the most subscribers is not a relevant metric anymore," Mathews said.
On 4G coverage, Reliance Jio is targeting 99% population coverage by March. Airtel has over 90% 4G coverage with an aggressive plan to grab the user’s primary 4G SIM slot. Vodafone Idea is the laggard with 50% 4G coverage. It plans to cover 70% of the country in the next six months, and 80% in 2019-20.
“Airtel and Jio are best placed to grab the low-hanging fruits and quickly upgrade customers from 2G to 4G in areas where Vodafone Idea doesn’t offer 4G currently," an industry executive said requesting anonymity.
Jio’s 4G user base of 252 million is almost twice of Airtel and Vodafone Idea combined.
“At this time, it is not quite clear which is the industry leader among telecom operators. But this should change over a year or two as the competition is forcing telcos to focus on their product and marketing," said Amresh Nandan, vice president and analyst (tech industry), Gartner. “The fight for the lead position would eventually not be based on subscriber size but revenue, profitability and even quality of revenue."
Vodafone Idea is deploying technologies to handle 2G spectrum refarming to 4G.
With plans to raise up to ₹ 25,000 crore, Vodafone Idea also faces spectrum liabilities of ₹ 3,000 crore due in March and an additional ₹ 12,000 crore due in the middle of the next financial year, Credit Suisse said in a note on 22 November.
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Airtel is focusing on better-paying customers while Reliance Jio is adding millions of subscribers every month by promising them the cheapest tariff.
“There is an aggressive new entrant (Jio), a mature player (Airtel) and a third player which is going through strenuous amalgamation (Vodafone Idea). The industry will have to wait for at least a year before getting a clear hierarchy in place," Mathews said.
This isn’t a sprint any more. It is a marathon.