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4G War In India Gaining Momentum Fast

By admin | 12th,April 2019

The massive adoption of smartphone in the country, fast falling ASP of 4G smartphones, along with spectacular decline in price of high-speed data connectivity have, no doubt, resulted in monumental growth in the volume mobile broadband users in the Indian sub continent. If we are to believe TRAI, the number of mobile broadband users in the country has already crossed 400 million! As a matter of fact, the figure should read 401.41 million, when you consider mobile devices as also dongles that support 3G and 4G connectivity, while 5G is knocking at the door. However, here is a breakdown of the stats, based on Mobile Broadband Subscribers (April 2018). (a)Reliance Jio : 48.9% (b)Bharti Airtel : 21.8% (c)Vodafone : 14.9% (d)Idea : 10.6% (e)BSNL : 2.9% (f)Others : 1.0% Telecom Industry is Going Through a Coalition Stage The telecom industry in India is currently going through a coalition stage, the situation taking a dramatic turn with the advent of Reliance Jio a couple of years ago. True, Vodafone and Airtel considered stalwarts in the industry are fighting tooth and nail with Reliance by way of offering cut-throat prices, but with each passing day, it become clearly evident that it is an unequal fight where the Reliance rath can hardly be halted

Reliance Jio May Come Up As Top Notch Player, But at What Cost?

Over the next one year period, Reliance is likely to reach the top slot in subscriber as well as service revenue metrics, surpassing all others in FY 19-20, as per report posted by Bernstein. However, report also predicts that the wanton thrust to reach the top slot may cost reliance a lot. What’s more, it may wreck the profitability aspect of the company, unless strategies are altered to survive the loss. In terms service revenue, Jio’s revenue reached Rs. 10,380 Crore for the Quarter, barely beating Bharti (Rs. 10,060 Crore). Then there was the question of subsidizing JioPhones heavily. In short, the overall picture isn’t encouraging at all. For instance, if Jio’s ‘non-specific’ depreciation metrics, along with handset subsidies being booked through Reliance Retail which does not show in Jio’s Profit and Loss Account, then the potential loss will amount nothing less than Rs. 15,000 Crore. The report further says that “The reason we highlight the tremendous expense Reliance is incurring to position Jio as number one is to make it clear this strategy cannot be maintained. We have always felt that once Jio reaches its target market share, they will switch their focus to monetization. While we think FY 19/20 is likely too early for this, we would not be surprised to see ARPU (Average Revenue Per User) start to creep back up starting FY21. We are currently forecasting ARPU increases of 8.2 per cent in FY21 and 11.2 per cent in FY22,". Last year, the stubbornness of Jio's drive towards becoming the number one operator in India helped it to gain market share to a great extent. From a global perspective this was indeed a major accomplishment. But it came at a very high cost. Although real figures have not been publicly disclosed, snippets from grapevines suggest a deployment of Rs.2.6 Lakh Crore ($37 billion) – an alarmingly high figure to gain a market prominence.

Which Party Will Win 4G War in India: Jio/ Vodafone/Airtel/Idea?

  • Airtel moved first with sizable ad budget over the 4G experience.
  • Vodafone joined the war, taking the side of Airtel, also injecting money in advertising 4G experience.
  • Jio took its first step by way of providing first hand 4G experiences in favor of the employees as also employee based referrals. This created the much needed buzz in the market along with a sensational media coverage and ‘word of the mouth’ campaign.