October 2020 was meant to be a big month for Reliance Jio, the country’s biggest telco. Just over a year ago, Mukesh Ambani—chairman of Jio’s parent company, Reliance Industries Ltd (RIL)—had told shareholders that Jio was within touching distance of reaching 500 million subscribers. In October that year, anonymous company sources told reporters that the target was to meet this milestone in 12 months.

While Reliance has managed to grow from practically nothing to almost 400 million active subscribers in the five years since its launch in September 2016, it missed its target. 

It isn’t for a lack of ambition, though. If anything, it’s a problem of too much ambition.

In March 2017, when Jio was still in its infancy, its top executives shared a bold forecast. The Indian connectivity market, they told analysts, would touch Rs 3,00,000 crore-4,00,000 crore Rs 3,00,000 crore-4,00,000 crore Reliance Industries Limited Jio executives told analysts that Jio is well positioned to grab 50% revenue market share Read more (~$40.89-54.52 billion) in annual revenues by 2020-21, buoyed largely by increased data consumption. Jio, they said, was “well-positioned” to claim half that bounty. 

Three years later, the Indian telecom market still isn’t as large as Jio predicted. Nor has Jio managed to capture 50% of the industry’s revenue market share. Because its other ambition—becoming the largest telco in the country—saw it offer rock-bottom data pricing. This essentially slowed both its revenue growth and that of the industry at large.

Jio became the country’s largest telco, both in terms of revenue market share and subscribers, but the cost was its revenue goals. With around 35% of India’s mobile user base, the operator currently commands a revenue market share of ~42%.

Revenue leader

Jio’s first quarter revenue for the year ended March 2021 stood at Rs 18,000 crore, far ahead of rival Bharti Airtel’s Rs 15,700 crore

Reaching Ambani’s target of 500 million subscribers, however, will be an uphill battle. Already, there has been rapid consolidation. From a ten-player market when Jio launched, just three private operators remain—Bharti Airtel and Vi (formerly Vodafone Idea) being the other two. Now that the market has stabilised, further gains will not come as rapidly as they have in the past for Jio. 

Not only will Jio’s final drive to 500 million be more difficult, these users—from geographies beyond metro and urban markets—offer lower average revenue per user (ARPU). 

“It’s more about showing off numbers than anything else,” said a Mumbai-based analyst who tracks the telecom space. This will come in handy as Jio eyes a public listing abroad, he added.

AUTHOR

Pratap Vikram Singh

Pratap is based out of Delhi and covers policy and myriad intersections with the other sectors, most notably technology. He has worked with Governance Now for seven years, reporting on technology, telecom policy, and the social sector.

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