Airtel and Vodafone Idea continue to cede ground to Reliance Jio, with market share losses in two consecutive quarters for both companies. (Mint)
Airtel and Vodafone Idea continue to cede ground to Reliance Jio, with market share losses in two consecutive quarters for both companies. (Mint)

Reliance Jio at the cusp of overtaking Vodafone Idea as largest telecom firm

  • While the pace of Reliance Jio’s monthly user base additions has slowed, it is still easily outpacing Airtel and Vodafone Idea
  • Reliance Jio has gained share in urban areas despite Airtel and Vodafone Idea's focus on these regions

The telecom industry’s revenue may have stagnated, but Reliance Jio’s relentless focus on customer additions has brought it within touching distance of market leadership. The company’s revenue in the December quarter rose 15% sequentially, taking its revenue market share to 29.2%, shows regulatory data collated by analysts at Jefferies India Pvt. Ltd.

If the current trends continue, Reliance Jio will emerge as the market leader in the current quarter (Q4 FY19). After all, its market share has risen by more than 350 basis points in each of the past two quarters, and the difference between Jio and the market leader is now less than 300 basis points, shows Jefferies India data.

Incumbents Bharti Airtel Ltd and Vodafone Idea Ltd continue to cede ground, with market share losses in two consecutive quarters for both companies.

While the pace of Reliance Jio’s monthly net subscriber additions has slowed, it is still easily outpacing peers. The company also gained share in urban areas despite Airtel and Vodafone Idea's focus on these regions.

But, as pointed earlier in this space, since Reliance Jio’s revenue market share remains way below its stated target of 50%, there is little likelihood of the company raising tariffs anytime soon. That should keep expectations about incumbent telcos in check.

At the same time, there is no respite yet for Reliance Jio investors as well. Focus on volume-led market share gains means investments will continue to remain elevated, elongating the payback period.

“This (revenue market share) may rise eventually when Reliance (Jio) pulls well ahead of peers, but even then, higher usage (not yields) may hold the key, likely keeping infrastructure and content spend high," add analysts at Jefferies India.

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