Richest Indian Mukesh Ambani's Reliance Jio Infocomm Ltd could become the country's No 1 telecom operator by revenue in 2021 and on a subscriber basis by 2022, a Sanford C Bernstein & Co report said.
Bernstein in the report said when it in 2015 initiated coverage of the Indian telecommunications market, it knew Jio was destined to profoundly change the landscape – the company had national spectrum, had been building out national fibre, and had the backing of the richest man in India.
"We expected 'unlimited' voice and 'big buckets of data' to put pressure on the market – forcing consolidation of the many smaller players. We even contemplated Jio could eventually surpass Idea Cellular to become the third largest operator in the country," it said.
Reliance Jio started operations two years back with free voice calls and data offering.
It started to charge for data (voice calls to be free-for-life) last year and had amassed about 227 million subscribers to rank third largest telecom operator in the country behind Vodafone-Idea combine and Bharti Airtel Ltd. It currently stands at about 253 million.
Jio currently has a 16 percent revenue and subscriber market share. Bharti Airtel has 31 percent revenue market and 26 percent subscriber market share. Vodafone-Idea has 42 percent revenue market share and 37 percent subscriber market share, respectively.
By end of 2020-21, Jio would have clocked 34 percent revenue market share at the expense of Vodafone-Idea and Bharti Airtel’s whose share may decline to 31 percent.
"We never expected, nor did we think possible, that it could eventually become the leading operator in the market." No startup operator has managed such a feat anywhere – and certainly not in a market where penetration levels among the 'middle classes' were already high.
The report said an update of long-term forecasts is now being published, which for the first time, shows Jio reaching the number one position.
"Given the current rate of ongoing customer acquisition, we think Jio could reach the leading position on a revenue basis by 2021 and on a subscriber basis by 2022," Bernstein said. "We are now convinced Jio's relentless subsidy of JioPhones will continue until this goal is realised.
" Industry-leading rivals Bharti Airtel Ltd and Vodafone Idea Ltd lack the "stomach" to battle Jio, which is luring away users with free voice services and inexpensive phones. "Instead we believe they have accepted their fate, and are looking forward to a time when Jio, having achieved a leading position, starts to monetise their base through higher pricing," it said.
Jio, the report said, will continue to add significant customer numbers as they continue to subsidise their JioPhones. Jio has consistently been adding 6 to 10 million new active customers per month.
"While not specifically disclosed, our understanding is that most of these additions are due to customers taking a highly subsidised JioPhone."
The company sells 4G JioPhone for a refundable deposit of Rs 1,500.
Both Bharti and Vodafone management have indicated they do not believe in handset subsidies for pre-paid users.
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