Reliance Jio’s surging adjusted gross revenue (AGR) is on the back of its 4G coverage.
Reliance Jio’s surging adjusted gross revenue (AGR) is on the back of its 4G coverage, which touches the country’s C-category circles where the legacy players have not been able to launch similar services yet on a similar scale. This is, of course, aided by its cheap JioPhone, which is a
4G feature phone, again something its rival incumbents have not been able to effectively counter.
The April-June industry adjusted gross revenue data brings out this trend clearly. As reported by FE earlier, during the quarter Jio came on top, beating Bharti Airtel in access service AGR at Rs 7,125.69 crore compared with Bharti’s Rs 6,723.54 crore. After adding the national long distance revenue, though, Bharti continues to remain on top with an AGR of Rs 10,192.12 crore, against Jio’s Rs 7,200.40 crore.
However, what’s interesting is that the bulk of Jio’s AGR has come from C circles which comprise Himachal Pradesh, Bihar, Odisha, Assam, Northeast, and Jammu and Kashmir. On a sequential basis, the industry’s AGR in these circles during the quarter rose 17.2%, contributing 17% to Jio’s AGR, versus industry contribution of 12.8%.
In fact, Jio’s AGR is metro circles dipped by 0.9% on a sequential basis where incumbents like Bharti offer strong 4G services. Analysts explain Jio’s better performance in the C circles compared with incumbents because the latter have not yet launched 4G services in them whereas they have launched them in metro and A category circles.
“Jio has freeway in C-circles due to lower 4G network penetration by Bharti,” a report by ICICI Securities noted, adding “Whether Jio can sustain performance in B&C circles where incumbents are fast expanding network is key to watch.”
Overall, the industry continues to face the competitive pressures brought in by Jio in terms of below-cost pricing. The industry AGR rose 1.3% quarter-on-quarter (q-o-q) but fell 9.4% year-on-year to Rs 32,200 crore during the quarter. Jio’s AGR rose 14.02% q-o-q to Rs 7,200 crore, while Bharti’s AGR at Rs 10,192 crore grew 0.9%. Vodafone and Idea saw their AGR decline by 7.1% and 5.2%, respectively, on a sequential basis.
“Jio just delivered 14% q-o-q growth in revenues without needing the industry revenue pie to expand must worry the incumbents,” noted Kotak Institutional Equities in its report.