Active Stocks
Thu Nov 30 2023 12:13:43
  1. Reliance Industries share price
  2. 2,384.5 -0.67%
  1. Tata Motors share price
  2. 698.8 -1.87%
  1. Tata Steel share price
  2. 128.25 0.43%
  1. ICICI Bank share price
  2. 932.15 -0.77%
  1. HDFC Bank share price
  2. 1,545.45 -0.89%
Business News/ Markets / Mark To Market/  How Reliance Jio transformed India's telecom industry, in five charts
Back Back

How Reliance Jio transformed India's telecom industry, in five charts

Data volumes have skyrocketed and voice traffic too has risen sharply in the past three years
  • This has been aided by a sharp cut in tariffs and net customer spend has dropped 41%
  • Reliance Jio has reported a steady increase in profits (Reuters)Premium
    Reliance Jio has reported a steady increase in profits (Reuters)

    It’s a little over three years since Reliance Jio Infocomm Ltd launched services and changed the face of the industry with large amounts of data and voice usage limits. The period has been marked by a huge spike in data usage and voice traffic and a sharp decline in consumer spends on telecom.

    The numbers are staggering. Data collated by Kotak Institutional Equities shows that at an industry level, data volumes rose 4160% to 20.3 billion GB in the July-September 2019 period. This is in comparison to the April-June 2016 quarter, or just before Jio’s launch. On a per customer basis, data usage rose from merely 500 MB per month in 2016 to 10.6 GB last year.

    The number of data subscribers doubled and their share among the total subscriber base increased to 57%, from 32% in June 2016, shows the data collected from Telecom Regulatory Authority of India’s quarterly performance indicator reports. The share of customers using 3G and 4G services rose to 52% of the total subscriber base, up from 14% three years ago.

    “Unlimited voice plans also unleashed the talkative Indian," add Kotak’s analysts, what with voice usage per customer nearly doubling to about 700 minutes per user per month. Total voice traffic rose 110% to 2.4 trillion minutes.

    Of course, all of this internet surfing and talking has been enabled by lower tariffs. Average revenue per user has fallen 41% to Rs74 per month in the past three years, the Trai data shows.

    The tab has been picked by the industry, whose revenues and profits have fallen sharply. The damage, of course, has been the most for Vodafone Idea Ltd. Bharti Airtel Ltd has done relatively better, although even its profits have fallen sharply. In fact, Airtel had reported earnings before interest and tax of Rs3444 crore in the June 2016 quarter, but reported a loss of around Rs1650 crore on a comparable basis in the September 2019 quarter (adjusted for a change in accounting standard this year). Reliance Jio, meanwhile, has reported a steady increase in profits, although its cash burn has been the highest in the industry and its return ratios have been low.

    The December 2019 quarter, meanwhile, marks an inflection point, with the industry agreeing on a truce over tariffs. Consumer usage and spends are likely to move in the opposite direction compared to the past three years. Airtel shares, as a result, have risen about 30% in the past two months, anticipating a revival in fortunes.

    It will be interesting to see what proportion of users increases spend on telecom and what proportion cuts usage instead, as this will determine the fortunes of the industry going forward.

    Milestone Alert!
    Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

    Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
    More Less
    Updated: 16 Jan 2020, 11:39 AM IST
    Next Story footLogo
    Recommended For You

    Get the best recommendations on Stocks, Mutual Funds and more based on your Risk profile!

    Let’s get started
    Switch to the Mint app for fast and personalized news - Get App