Reliance Jio beats Vodafone-Idea but falls well short of Airtel’s revenue growth in the September quarter

• Reliance Jio profit grew 12% sequentially despite cuts in post-paid tariffs
• Reliance Jio introduced new postpaid plans to steal some of the subscriber churn from Vodafone Idea.
• Among operators, Vodafone Idea has the highest share of the postpaid market with 43% followed by Bharti Airtel at 28%.

The telecom arm of Reliance Industries reported a 12% jump in profit between July and September to hit ₹2,844 crore. It’s revenue also increased by 5.6% as it continued to remain the company’s shining beacon of hope with oil & gas taking a hit.


This is despite the fact that Reliance Jio introduced new postpaid plans to steal some of the subscriber churn from Vodafone Idea.It already boasts of crossing the 400 million subscriber base threshold to become the world’s first telecom major to have a base this large in a single country.


“We see limited risk to Bharti Airtel as it has managed churn well despite and 8% to 25% premium on prepaid and 50% to 60% of its postpaid subscriptions,” said Jefferies in its report.

Company	Revenue growth in July-September 2020
Jio	5.6%
Bharti Airtel	22%
Vodafone-Idea	1.2%

Owing to the cheaper prices, the growth of the company’s average return per user (ARPU) continues to slow down. Analysts believe that the hit could result in a duopoly between Bharti Aitel and Reliance Jio rather than a Jio monopoly. ”With Jio’s impending launch of an affordable smartphone in collaboration with Google, the price increase could get pushed out by another 12 to 18 months,” said IIFL Securities report.


Reliance wants a piece of the postpaid market
Over the past four years, India’s postpaid market has halved to ₹221 billion. It forms 15% of the sector’s revenues and 5% of the sector’s active subscribers. The decline has been a result of a 42% drop in postpaid ARPU to ₹357 with prepaid plans getting cheaper.


Among operators, Vodafone Idea has the highest share of the postpaid market at 43% followed by Bharti Airtel at 28%.

For Airtel, postpaid forms 5% of its subscribers and 16% of its India mobile revenues. It would take 10% churn of its postpaid subscribers would lead to a 1% dip in its revenues.

Jio’s plan is 20% cheaper than Bharti Airtel’s at entry level and offers nearly twice as much data as Vodafone Idea.

	Bharti Airtel	Vodafone Idea	Reliance Jio
Price	499	399	399
Data benefit (GB)	75	40	75
Voice	Unlimited	Unlimited	Unlimited
Content:
Telco apps	Yes	Yes	Yes
Amazon Prime	Yes	No	Yes
Disney+ Hotstar Prime	No	No	Yes
Netflix	No	No	Yes

Source: Companies, Jefferies report dated 23 September 2020

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