Reliance Jio customer addition pace not sustainable: ICICI

Reliance Jio Infocomm’s record 16 million-odd customer adds in September is not sustainable as it has been driven by continuing free offers, brokerage ICICI Securities said, analysing data recently put out by the telecom regulator.


Jio’s 16 million customer adds in September were way above market leader Bharti Airtel’s 2.4 million, Idea Cellular’s 1.91 million and Vodafone India’s 5.25 lakh levels, according to a Telecom Regulatory Authority of India (Trai) report issued last week.

The brokerage house, however, said it would refrain from commenting on Jio’s subscriber net adds or its 1.7% share of the active subscriber market in September since the Mukesh Ambani-owned company is offering services completely free till March 2017, adding that impact was also not meaningful since the country’s top three phone companies, Airtel, Vodafone and Idea had seen a combined 175 basis points (bps) on-year rise in their active subscriber market share during the same period.

Among the top-3 operators, Bharti continues to outperform with an active subscriber market share improvement of 100 bps over the last one year to 26.5%,” ICICI Securities said.

Industry experts are also not attaching much significance to Jio’s strong customer adds in September since it has had little impact on the industry mobile number portability (MNP) churn rate, which was stable at 0.5%.

Brokerage ICICI Securities, however, said it would closely track the churn rate as it would be a key indicator of Jio’s impact on rivals’ customer market share in coming months.

European brokerage house Credit Suisse expects Jio’s user base to climb to 70 million by end-December (from 58 million now), and also sees the country’s newest telco to offer customers a richer 4G network experience with more stringent daily data caps in place, which should also help it retain customers, post conclusion of its free services offer.

Brokerage ICICI Securities said market share gains for Jio in September were higher in Haryana (3.1%), Punjab (2.4%), Gujarat (2.3%) and Kolkata (2.3%), while it was lower in UP-East, West Bengal, Northeast and J&K circles, possibly due to “lower 4G smartphone penetration”.

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