The Reliance Jio effect, in numbers

The launch of Reliance Jio Infocomm Ltd last September, particularly the tariff war it has unleashed on its competitors, has deepened the crisis facing India's telecom sector.

One offshoot of this is the major drop in earnings reported by industry leaders Bharti Airtel and Idea Cellular with each passing quarter.

Aslam Hunani/Rediff.com tells the story in numbers.

The entry of Reliance Jio has not only eroded the balance sheets of the top players, but is also eroding their user base and new entrant consolidates itself.

India's mobile subscriber base as of September 2017 stood at 946.66 million as per data from the Cellular Operators Association of India (COAI).

Bharti Airtel is still maintaining its lead over its nearest rivals Vodafone and Idea Cellular, followed by Reliance Jio which was launched last September.

While Bharti Airtel has a subscriber base of 282.04 million (or 29.80 per cent of the market), Vodafone clocked a subscriber base of 207.44 million (21.91 pc of the market), while Idea Cellular has a subscriber base of 190.15 million (20.09 pc of the market).

In the year since its launch Jio has captured 13.6 pc of the market, no mean achievement.

Wave of consolidation

Not only is the entry of Reliance Jio shifting the goal posts for the industry because of the tariff war that it ignited, the sector is also seeing a wave of consolidation.

The merger between Vodafone and IDEA, which is expected to be completed by 2018, may give the merged entities an edge over Bharti Airtel which is the current market leader.

And recently Bharti Airtel acquired Tata group's wireless phone business virtually for free, although it was not the first of its kind transaction.

In February 2017, Telenor sold its Indian operations to Sunil Mittal-owned Bharti Airtel in much the same fashion as the Bharti-Tata deal, with Mittal virtually paying nothing for the acquisition.

Seized of the crisis facing the sector, the Indian government is trying to revive it by allowing 100 pc Foreign Direct Investment instead of the current 74 per cent.

Earnings and Profits

Bharti Airtel, which has the largest subscriber base pan-India, reported earnings of Rs 217.76 billion for the September 2017 quarter, which saw a drop of 11.73 per cent from the quarterly results of September 2016 when the company had reported earnings of Rs 246.71 billion.

Accordingly the company is seeing a decline in profits too.

For the quarter ended September 2017, the company reported a profit of Rs 2.19 billion, a major drop from the Rs 13.45 billion profit for the September 2016 quarter.

The decline in earnings story doesn't end with Bharti Airtel.

Idea Cellular, which has a subscription base of 190.15 million after Bharti and Vodafone, too saw a decline in its quarterly results figures.

In the quarter ending September 2016, the company reported a revenue of Rs 92.25 billion, which fell to Rs 74.65 billion for the September 2017 quarter.

The company had reported a loss of Rs 0.42 billion for the September '16 quarter, which further ballooned to Rs 11.9 billion one year later.

Reliance Jio, the new entrant, reported a revenue of Rs 61.47 billion and net loss of 2.706 billion (EBIT)*. The information comes from Reliance Industries Limited's financial and operational performance report for the quarter ending September 30.

The entry of Reliance Jio has visibly affected the balance in the telecom sector by leading to a tariff war among the existing operators, which is straining their financials.

With Jio completing one year in September, it's wait and watch now for the major telcos before they make their next move in an already stressed sector. 

*Earnings Before Interest and Taxes

Image used for representational purpose. Photograph: Reuters.