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Jio adds more subscribers at the expense of Airtel, Voda

Equity Right Reliance Jio

Mukesh Ambani led Reliance Jio records an increment of 94 lakh subscribers despite a decline of 1.82% in teledensity of India in March 2019. This recent addition of customers has taken their total clientele base to 30.77 crores. However, Vodafone Idea Limited (VIL) sheds 1.45 crore where Airtel lost 1.51 crore customers.

 

The Telecom Regulatory Authority of India (TRAI) revealed that the teledensity in India has declined to 90.11% from 91.86%.
Since the arrival of Reliance Jio in the telecom industry, many companies have shut whereas rest are struggling to sustain in the industry.
Once leading companies Vodafone-Idea along with Bharti Airtel have now witnessed a decline in their customer base in March 2019. The decline was recorded mainly due to the strategy these companies have adopted.

Strategies adopted:

Airtel and VIL are expeditiously paring their customer base in attempts to get rid of their low-value customers. The companies have adopted minimum recharge schemes to shed their low-paying user base. The scheme requires users to pay ₹35 every month to avail services and avoid termination of services. The companies are unable to sustain the 2G network across India which require high investments for low returns. The companies plan to divert their resources like spectrums towers from 2G towards providing 4G services. This will be beneficial towards facing intense competition from JIO. 

 

Airtel & VIL are focusing on enhancing their Average Revenue Per User (ARPU) by shelling out low-value customers. The companies plan to boost their profitability by improving their ARPU. The increased profits would enable the companies to maintain healthy cash flows and smoother functioning. The move is in response to JIO’s aggressive expansion plan which has led to heavy losses for Airtel & VIL.

 

The ARPU of Airtel for Q3FY19 stood at ₹104 recording an increase of 4.1%. For March 2019, In the case of VIL, the ARPU soared 18% accounting to ₹104. On the contrary, Reliance Jio’s ARPU fell 4.5% to ₹126 but still remains to be highest in the industry.

 

While Airtel & VIL are shedding their customer base, Reliance Jio is moving forward with an entirely different plan. Jio has been focusing on the rapid expansion of its customers base. The company has added over 30 crore customers. They are giving up on its short-term profits with a plan to monetize their customer base in the future. While other telecom companies were losing customers, Reliance Jio added 94 lakh customers.

The conclusion:

 

However, In March 2019, Vodafone-Idea leads in terms of subscriber market share dominating with 33.98%. The company is followed by Bharti Airtel having 27.99% market share; Whereas Reliance Jio accounts for 26.40% Airtel & Vil are shedding customers to maintain healthy income levels. On the other hand, Reliance Jio will continue to focus on expansion and will rely on the future potential of the customer base to improve ARPU.

 

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