RJio's 4G speed slows 20% in October, says CLSA

Reliance Jio saw fall in speeds from 7.2 mbps in September to 6 mbps in October, according to report

The 4G data speed of Mukesh Ambani-owned Reliance Jio declined by about 20 per cent in October across 17 circles even as Bharti Airtel improved its speed while expanding footprint to 19 circles. 

According to a report by CLSA, Reliance Jio saw a 20 per cent fall in speeds from 7.2 mbps in September to 6 mbps in October and with 17 of the 22 markets reporting the fall, a quick subscriber ramp-up led by ‘free offers’ impacted service quality in most markets. 

The fall in Jio speeds is higher in data-heavy markets such as Delhi and Mumbai thanks to higher usage of 4G services in these markets.

During the same period, Bharti Airtel saw an increase in speeds in 10 of its 16 4G markets and also expanded its 4G service to cover 19 of the total 22 markets.

The findings are part of CLSA’s second edition of quality of service tracker, which analyses the Telecom Regulatory Authority of India’s speed test data based on 2.5 million and 0.5 million samples on 4G and 3G networks, respectively. 

At 6 mbps, Reliance Jio’s speeds were similar to the average speeds of Idea Cellular and Vodafone at 7 mbps but nearly half of Bharti’s 11.5 mbps. The research firm said if Reliance Jio’s 4G speeds do not improve, the new entrant might extend “free offers” beyond December adding risks to the data pricing of incumbents. 

Idea Cellular also reported an increase in 4G speeds in six of its 10 4G markets and expanded its services to cover 11 markets during the month. “Among the four large operators, while Bharti Airtel and Idea Cellular have improved/maintained 4G speeds, Vodafone and Reliance Jio have seen a fall,” CLSA said. The research firm said as the average 4G speed is still two to three times 3G speed, it could continue to drive migration from 3G to 4G services.

According to Trai data, during October, Bharti Airtel and Idea Cellular maintained 3G and 4G speeds despite rising 3G and 4G adoption. 

However, CLSA said in case Jio extends the free offer, data realisations of incumbents will be impacted. 

Since Reliance Jio’s launch, incumbents have launched several promotional offers and this has impacted their data realisations. 

During the second half of FY17, CLSA has forecast a 30 per cent year-on-year decline in the data realisation of Airtel and 25 per cent for Idea. 

“A one per cent further fall in data realisations without any corresponding increase in usage could impact Ebitda (earnings before interest, taxes, depreciation and amortisation) by 0.4-0.8 per cent for Bharti Airtel and Idea Cellular, respectively,” CLSA added.