India’s older mobile operators Bharti Airtel, Vodafone India and Idea Cellular have so far managed to hold on to — and even grow — their subscriber market shares despite new entrant Reliance Jio’s price onslaught, mainly by acquiring customers of smaller exiting telcos. But now they will face a tougher task to protect their turf because most subscribers of smaller players such as Reliance Communications, Tata Teleservices, Telenor India and Aircel — which are being shut down or sold off — have already moved to the larger operators.
“When the dust settles down and subscribers from beleaguered smaller players have been mopped by the Big Three (Vodafone-Idea combine, Airtel and Jio), the tussle for supremacy will resume,” said Sandip Das, senior advisor at telecom consulting firm Analysys Mason. “With Jio’s ambitions to lead, the market will continue to see aggressive moves,” he said.
Since Jio’s launch in September 2016, subscribers have steadily moved from existing smaller telcos including RCom, Tata Teleservices, Telenor India and Aircel to the four larger players, mainly to Jio.
Accordingly, Airtel’s customer market share has increased to 25.7% in March this year from 24.3% in October 2016, a month after Jio’s launch. Vodafone’s customer share went up to 18.8% from 18.7% during the same period while that of Idea rose to 17.9% from 17.2%. Jio, which had a market share of 3.3% in October 2016, has increased that to 15.8% as of March 2018, as per Trai’s data.
According to ratings agency ICRA, these four telcos together had 924.7 million subscribers as of March 2017, accounting for a combined market share of 78.1%, up from 67.2% a year earlier.
Conversely, the total subscriber base of the remaining telcos has been declining — standing at 258.7 million as of March 2018 against 383.4 million as of March 2017.
“The situation appears even stark when seen in terms of active subscribers,” ICRA said. “The top four telcos hold 902.3 million active subscribers, or 90.4% market share. This has increased significantly from 73% as on March 2017, indicating gradual waning away of the exiting telcos,” it said.
Both Telenor India and TTSL are being merged into Bharti Airtel, while RCom has shut shop and Aircel is undergoing bankruptcy proceedings.
According to an analyst who did not want to be named, the Mukesh Ambani-owned Jio will make its next big move via another drop in price or exclusive content offerings once it has gained about 18-19% of the subscriber market share.
Jio didn’t respond to ET’s queries as of press time Thursday. The company had earlier said that it is targeting a 50% revenue market share in a few years, from around 19% now.
“The subscriber-led competition is expected to continue for a few more quarters,” said Harsh Jagnani, vice president, corporate ratings, at ICRA.
HSBC Global Research in a recent report highlighted that while merging companies Idea and Vodafone have managed to grow their subscribers since Jio’s launch, the trend may be short lived.
“In our view this has been possible because as smaller operators have wound up, their subs (primarily on 2G) naturally moved to the incumbent telcos,” HSBC analysts Rajiv Sharma and Darpan Thakkar said in a report. “However this tail may soon disappear, and incumbent losses to Jio (down to the network gap) may be more visible,” they said.
HSBC expects Vodafone-Idea to be more vulnerable to user market share losses to Jio compared with Airtel, since “Vodafone Idea’s 4G network is likely to continue to trail Jio and Bharti given the gap on 4G capex”. The brokerage house expects the combined entity to lose 600 basis points in customer market share in the next 6-7 quarters.