Reliance Jio, which has emerged as the fastest growing telecom operator in the country grossing around 186 million users since its launch in September 2016 as well turning profitable in the very first year of its operations (net profit of Rs 723 crore on a turnover of Rs 23,714 crore in FY18), now plans to focus on the rural markets where it sees huge scope, especially for increasing internet usage and 4G-enabled phones.
In its annual report for FY18 released on Thursday, the company said that the country currently has around 450 million internet subscribers, making it the second largest online market in the world after China. However, the overall internet penetration is still at 34%, skewed in favour of urban India, which has 76% internet penetration.
Rural India is still under-penetrated with only 15% penetration. Of the total rural population of 906 million, about 750 million still do not use the internet. “The above gap represents an opportunity of an at least 150 million households, which are yet to be connected,” the company has said in the annual report.
The company’s focus now on rural areas is understandable because its subscriber market share of rural users is still low at around 10% compared with Bharti Airtel’s 30%. If 52% of Bharti’s overall users come from rural areas, in the case of Jio only 27% of the 186 million subscribers come from such areas.
As per an EIU forecast, Indian households have been witnessing an upwards increase in their disposable income since the last few years. Deloitte has predicted that rising affluence of households will lead to increased demand for consumer goods, entertainment systems, etc, which will further drive demand for internet services. Hence, these untapped households will represent the next wave for internet growth in India, which now Jio wants to tap.
It is also trying to focus more on rural areas by its 4G-enabled feature phone. “These phones would potentially bridge the digital divide by reaching out to the bottom of the pyramid with several data-driven functionalities bundled into the devices,” the company has said in the report.
The Jio feature phone comes for free in the sense that the upfront payment of Rs 1,500 is treated as a refundable security deposit if a consumer returns the phone after three years. However, in such cases a minimum recharge of either Rs 49 or Rs 153 has to be made every month.
In the Rs 49 pack, consumers get 1 GB of data a month while in the Rs 153 pack 1 GB data comes every day for a month. The current smartphone penetration in the country stands at as low as 35% and the top 30 cities make up 51% of the entire smartphone market in the country, hence Jio sees immense scope here.