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Here's why Vodafone Idea is losing to Reliance Jio on several fronts

Vodafone Idea is involved in rationalising subscribers at the lower end but that is not viable in shoring up the ARPU

Surajeet Das Gupta  |  New Delhi 

Vodafone Idea

With over 50 per cent of its 10.5 million net additional mobile subscribers in October (over the previous month) coming from those who bought the Reliance Monsoon Hungama offer for Rs 1,097, which comes bundled with a 4G feature phone and six months of unlimited data and voice, the telco is giving sleepless nights to the market leader, the merged

ALSO READ: Vodafone Idea urges govt to wait till 2020 for spectrum auction: Report

The problem is simple: None of the incumbent players, including Vodafone Idea, has a similar offer to challenge Jio and ensure that its 2G customers do not migrate.

According to the Telecom Regulatory Authority of India (Trai), which declared the subscriber numbers of the merged telco (Vodafone and Idea) for the first time, the telco saw its fall by 7.3 million customers in October.

And if the September numbers of the combined entity over the previous month are taken into account, the telco shows a net loss of around 14 million subscribers in just two months.


ALSO READ: Vodafone Idea entity lost 73.6 lakh subscribers in October, says Trai

In the same period Jio added 23.5 million net customers.

What is more worrisome for the number one telco is that Jio has been able to generate an average revenue per user (ARPU) of Rs 99 per month from these new subscribers from day one and get the money upfront.

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And that is higher than the blended of Vodafone-Idea, which was at Rs 88 as declared by the company at the end of September. This means Jio is grabbing Vodafone Idea’s customers from the mid end of the market, and not the lower end of their customer base.

is involved in rationalising subscribers at the lower end but that is not viable in shoring up the even by increasing the minimum recharge tariff to Rs 35. Analysts point out with it losing mid-end subscribers, the desired impact on the might prove difficult.

ALSO READ: Airtel, Vodafone Idea boost revenue in metros during September: Report

Jio’s new subscribers have under the scheme given their old phone and paid Rs 1,097, for which they have received a new 4G feature phone for a security of Rs 501 (which is returnable after three years), and a recharge of for six months. After the six-month period they have the option of recharging their phones with a coupon of Rs 49, Rs 99 or Rs 153 a month. Sources close to Jio say most of them are moving to a recharge of Rs 153.

Analysts such as point out that the run rate of the net addition of Jio has been slowing. It was 9-10 million in January-June, 12-13 million in July-September and slightly lower that in October. And the positive note is that both Airtel and showed good increases in wireless broadband subscribers — 2.1 million and 1.6 million in October, respectively.

And Airtel, despite the loss in net addition this October, has been able to hold on to its market share at 29 per cent plus for months together.

First Published: Thu, January 03 2019. 22:39 IST
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