Mukesh Ambani's Reliance Jio to become India's No.1 telecom company
New Delhi : Backed by India's richest man Mukesh Ambani, the Reliance Jio Infocomm Ltd is likely to become the No.1 telecom company in India in revenue terms by 2021. The reson behind its upcoming success lies in the expansion of subscriber base, said Sanford C. Bernstein & Co. analysts Chris Lane and Samuel Chen. However, industry-leading rivals Bharti Airtel Ltd and Vodafone Idea Ltd lack the support to battle with Reliance Jio. Recently, the Ambani's firm is luring away users with free voice services and inexpensive phones, Lane and Chen wrote in a report published 10 December.
Reliance Jio launched a free-for-life call service last year that triggered a price war and consolidation in one of the world’s most crowded mobile markets. Its free introductory nationwide 4G wireless service started in 2016, is roiling the world’s largest telecommunications sector after China’s.
Now in 2018, Reliance Jio has 227 million users and has become profitable as it brings connectivity to remote Indian villages.
The resulting interruption forced smaller operators to quit, merge or go bankrupt. Newly merged Vodafone Idea has toppled Bharti Airtel to become India’s top operator, while Reliance Jio has quickly added subscribers to gain the No.3 spot.
Bernstein wrote that it expects Reliance Jio to keep selling its subsidized Jio Phone, the 4G feature phones it sells for a refundable deposit of about ₹1,500, until it reaches the No.1 position.
Bernstein said average revenue per unit would probably rise for Bharti Airtel and Vodafone Idea this year as they cancel user contracts that generate little revenue. The research firm does not expect 3G/4G pricing to start to creep up until 2020. Bernstein lowered its price targets for Airtel to ₹450 a share and Vodafone Idea to ₹40 a share.
At 1.11pm, Bharti Airtel shares were down 2.47% at ₹296.40 apiece while Vodafone Idea’s were lower by 1.78% at ₹33.20. RIL share price stood 3.82% weaker at ₹1,090.00 even as the benchmark Sensex traded 1.44% lower at 35,158.70 points.
