Reliance Jio lost subscribers for the first time in 10 quarters but there's good news for Mukesh Ambani in this too

• Jio lost over 10 million subscribers in the September quarter – a first for the telco in the past 10 quarters.
• This means that the rate of its active subscribers has increased, which means there are more subscribers than before who are actively paying money to Jio.
• JioPhone Next is the next weapon in the company's arsenal as it looks to recoup the loss in its subscriber base.

Reliance Jio had a subdued quarter this September as it saw its subscriber base erode for the first time in 10 quarters, putting the brakes on the Mukesh Ambani-led telco’s juggernaut. But there could still be a silver lining for Mukesh Ambani’s company.

“A combination of strong data consumption along with the deactivation of low-paying users contributed to Jio’s decent sequential ARPU growth,” Nitin Soni, Senior Director, Fitch Ratings told The Economic Times.

Essentially, subscribers who use Jio as a second SIM either to retain their number or to continue receiving calls, have likely left the company. With these subscribers switching the boat, it leaves Jio with a higher number of subscribers who pay money to use the telco’s services, translating to better revenue collection.

Reliance Jio has traditionally suffered a much inferior rate of active subscribers when compared to its rivals Airtel and Vodafone Idea.

According to the latest data published by the Telecom Regulatory Authority of India (TRAI), Reliance Jio’s active subscriber rate is a shade under 80%. In comparison, Airtel’s rate is nearly 98%, while Vodafone Idea is a little over 87%.

Active subscribers are those which pay for an active plan to their telecom provider. These subscribers are important as higher the rate of active subscribers, higher the amount of money the telecom company earns from them.

Jio has been saddled with a sub-80% active subscriber rate for a long time now. One of the reasons behind this is that the company does not terminate or suspend services after the expiry of its users’ plans – Jio subscribers can continue to enjoy incoming services even after their plans expire.

This is not the case with Airtel and Vodafone Idea, who only offer a seven-day grace period for their subscribers post expiry of their plans. This means their users will have to pay at least ₹79 per month, depending on their respective circles.

Given that Jio has so far refrained from forcing its subscribers to have an active plan for basic services like incoming calls and messages, and that it has also avoided raising tariffs, the telco has only one option left – a higher active subscriber rate, resulting in improved realisations from its customer base.

It is worth noting that Reliance Jio has a huge lead over Airtel when it comes to the number of total subscribers – 429.5 million versus Airtel’s 354 million.

However, until June 2021, it was in a neck-to-neck fight with Airtel in terms of active subscribers. Jio finally overtook Airtel in July this year, and now has a lead of 4 million over Airtel.

Subdued Q2 performance could put tariff hikes on the back-burner

Analysts believe the subdued performance in the second quarter could put tariff hikes on the back-burner.

US brokerage Jefferies called Jio’s performance “operationally weak”, and added “a repeat of its 2Q [second quarter] subscriber performance in 3Q [third quarter] might dash hopes of a tariff hike in the near/medium term,” according to a report by The Economic Times.

JioPhone Next’s Diwali launch could bring back some of the lost sheen to the Mukesh Ambani-led telco. “With its launch (around Diwali), the RIL management expects to re-engage some of Jio's subscribers in the lower pyramid, and bring them back into the Jio network,” JM Financial said in its report.

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