Reliance Jio’s overall revenue market share (RMS) rose from 19.8 per cent in the fourth quarter (Q4) of 2017-18 (FY18) to 26.1 per cent in Q2FY19, mostly at the expense of incumbent operators.
Although no direct link can be established between the two, the period of significant growth at Jio followed telecom regulator Trai's rule on predatory pricing issued in February, incumbent telcos argued.
This increase was only in three quarters, and it happened because of an order by the Telecom Regulatory Authority of India, which tweaked the definition of significant market player (SMP) for predatory pricing, sources at these companies said.
Under the new definition of the SMP, the regulator did not allow predatory pricing by telcos which had more than 30 per cent subscriber or revenue market share.
However, subsequently, Jio has crossed the 30 per cent RMS mark in 15 out of 19 circles (excluding metros), up from nine circles in Q4FY18.
The increase was phenomenal in many circles: In Haryana, the RMS gain was 13 percentage points; in Bihar, 20 percentage points; in Odisha, 15 percentage points; and in Assam, 11 percentage points, analysts said.
The Trai rule of February, incumbents alleged, permitted only Jio, which had a lower market share to offer low tariffs.
It did not even allow telcos, with more than 30 per cent market share, to offer segmented tariffs for
consumers (customised for a person), that was common for postpaid customers earlier.
The telcos had challenged the order in Telecom Disputes Settlement and Appellate Tribunal, which, apart from setting aside the order, observed it is non-transparent on Thursday.
“The order has come too late when they have already achieved their objective of reaching 30 per cent in most circles in the country. How will we be compensated for this loss of business” said a senior executive of a telecom company.
Sources close to Jio argued that the tariff order had no major impact on them. The increase in subscriber base and revenue market share that Jio was able to garner was due to its USP- the launch of its 4G feature phone (which is effectively free to the customers) in a big way in May.
“While at an average we are making net adds of 10-12 million customers in the last four to five months, half of them were on our own feature phones. We are getting 2G subscribers to move to 4G at a very low cost while competitors had no similar offering,” according to a source close to the company.