Led by market leader Bharti Airtel, Indian telecom crossed an invisible line in October 2008. For the first time in the country, a telecom market—Delhi—had more mobile subscriptions than people. Nineteen million subscriptions for a 17 million-strong population.
The crossing of that invisible line in Delhi was soon followed by many other cities. Chennai, six months later. Then Mumbai and Kolkata by November 2009.
After rightly attributing 100-plus percent mobile penetration to the rise of customers using multiple SIMs, Sanjay Kapoor, the CEO of Bharti Airtel at the time, was still upbeat, saying, “As an operator, we see the SIM penetration going up further as new applications come in.”
But in October 2018, exactly a decade after Delhi crossed 100% mobile penetration, Gopal Vittal, Kapoor’s successor, did the unthinkable. He reversed course and culled 49 million of his own subscribers. On account of a bloodying battle with Reliance Jio—a new competitor for whom no expense, regulation or conventional wisdom was a barrier.
It is a battle that has seen Jio indulge in what many experts view as predatory pricing; crashing data tariffs and burning cash in its bid to upend the market. According to one telecom analyst, Jio spent between Rs 40,000-45,000 crore ($5.8-6.5 billion) in each of the last two years. Whereas Airtel spent only around Rs 10,000 crore ($1.44 billion) in the same period to compete with Jio’s aggressive pricing. The analyst asked not to be named as he isn’t authorised to speak to the media.
Airtel’s skirmish with Jio has seen its monthly average revenue per user (ARPU) wither from a high of Rs 202 ($2.90) in 2014 to Rs 104 ($1.50) today. And with the situation decidedly grim, Vittal made a gambit whose scope and scale were beyond anything the world has seen. No business wilfully agrees to shed 15% of its existing customer base. For Vittal and Bharti Airtel though, letting go of 49 million subscribers would mark the beginning of their attempt to strategically redefine their fight against Reliance Jio. Though belated, perhaps it was even a judo move—instead of fighting to retain its marginal subscribers against Jio’s offers, better to let go of them yourself.
But culling subscribers was only the start. To actually brace itself against the relentless creep of Jio and stand its ground, Airtel will need to execute the rest of its plan. And there’s no margin for error.
Jio won the battle. Airtel is girding for the war.
There is no global parallel for the speed or scale at which a late entrant has upended a mature telecom market the way Reliance Jio has. From a commercial launch in September 2016, it went on to cross 100 million subscribers in 6 months, and then 200 million before turning two.