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  1. Reliance Jio impact: Jefferies says prefers Bharti Airtel over Idea Cellular in telecom sector

Reliance Jio impact: Jefferies says prefers Bharti Airtel over Idea Cellular in telecom sector

RJio announced the extension of its free services by another three months till 31st March 2017, not entirely unexpected.

By: | Updated: December 8, 2016 6:16 PM

RJio announced the extension of its free services by another three months till 31st March 2017, not entirely unexpected. We believe RJio is currently being used as a second SIM, given the robust subscriber additions that incumbents have shown in the past two months. This does not undermine RJio’s ability to take away volumes during the free offer and market share beyond. Continue to prefer Bharti over Idea.

Since its launch RJio has acquired over 50 million customers with an average usage >30x the average industry usage. This is more a function of RJio’s marketing and free services rather than actual adoption rates or usage patterns. 20% of its subscribers are using >1GB/day (Bharti’s average data usage per customer across its 63m data subscribers is 1GB/month).

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Cumulative subscriber addition has been 10m over two months, similar to past trends with Bharti and Idea continuing to gain share. We believe that this is indicative of RJio being primarily used as a second SIM also evident from our checks. The extension of the free offer is company management buying time to gain customer stickiness to its offering.

RJio has also capped its free usage policy to 30x current industry average and stated that it will now optimise to make the service experience more uniform across the customer base. In the briefing, the company said that 8% of its towers have faced congestion issues leading to slower speeds which it is resolving.

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