Here's why Mukesh Ambani's first Jio profit is 'too good to believe'

Reliance Jio Infocomm Ltd.’s first-ever net income is “a bit too good to believe” for Sanford C. Bernstein analysts, who examined how the phone carrier accounts for some costs.
Jio’s “unique approach” results in a slower pace of recognising depreciation and amortisation, which led to a Rs 12 billion ($187 million) charge in the December quarter, according to a February 2 Bernstein report. Using a rate similar to local rivals would have quadrupled that number and turned Jio’s reported profit into a loss of Rs 24.1 billion, analysts led by Hong Kong-based Chris Lane estimated.

The carrier, controlled by India’s richest man and a unit of Reliance Industries Ltd., posted a net income of Rs 5.04 billion last quarter, about 16 months after its debut sparked an industry price war that crashed revenues. The result was boosted by Jio’s policy, linking depreciation charges to “its own assessment” of usage and economic benefit, while other Indian carriers amortize telecom assets at a fixed rate over time, Morgan Stanley said in a Jan. 21 report.

Customers will force Airtel, Vodafone, Jio into battle for market share

In a letter to the Telecom Regulatory Authority of India recently, Reliance Jio Infocomm accused Bharti Airtel of introducing discriminatory tariff plans in the marketplace and using misleading advertisements to promote its services. To many, it was nothing but round two of a bruising telecom battle that began when Reliance Jio entered the market nine months ago doing much the same that it now accuses competitors of doing: Undercutting rivals and offering freebies to consumers.

While Jio had a free run till March this year notching up over 100 million subscribers in the process, experts say that sanity in terms of pricing and promotions will eventually prevail. But for the moment, the price and discount focused Indian customer is forcing brands into one of the biggest battles for market share.

“There will likely be a spike in consumers switching across all mobile carriers. As a result, they (mobile carriers or telecom operators) will be making quick reactive decisions based on the competitive scenario,” Paul Moore, director, global, Kantar Worldpanel ComTech, part of the WPP Group, said. “Mobile carriers will place more emphasis on products and services to add value and lock in users,” he says.

GraphKantar Worldpanel ComTech is the largest continuous consumer research mobile phone tracking panel in the world and India is the nineteenth addition to the list of markets tracked, indicating its importance, Moore says. Most telecom majors are already beginning to indulge in reactive decisions, offering tariff plans based on lifestyle, usage, occupation, gender and age. The spending pattern of subscribers has come sharply into focus, he says, as most players determine which plan will suit the consumer’s need.

There is a reason why telcos in India are doing this, he says. Average monthly spend on mobile services is lowest in India vis-a-vis the Comtech panel’s other markets, which includes the US, UK, Brazil, Spain, Argentina, Russia, Germany, Italy, France, Australia, China and Japan.

Moore says India’s average monthly spend stands at merely $2.5 or Rs 161 based on the current exchange rate ($1 = Rs 64.55). Compare this with China’s average monthly spend and it stands at $8.7 or Rs 562, Brazil’s $7.6 or Rs 491 and Mexico’s $10.7 or Rs 691.
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Jio ends its Summer Surprise scheme after Trai order

Complying with the Telecom Regulatory Authority of India’s (Trai’s) advice, Reliance Jio on Thursday withdrew its Summer Surprise offer. Announced last week, the scheme promised to provide complimentary services to every Jio Prime member for three months starting April 1.

The company confirmed complying with Trai’s advice. Under the scheme, all Prime members making their first recharge payment of Rs 303 (or higher) would have got three months’ complimentary services in addition to the benefits of their purchased plan.

All customers who have already subscribed to the offer would continue to be eligible for it, the company said.

Jio started billing customers from April 1. The company claimed about 72 million users had subscribed to its Jio Prime service.

The complimentary offers by Jio in the past have been a bone of contention with rivals Bharti Airtel and Idea Cellular. The two companies appealed to the Telecom Disputes Settlement and Appellate Tribunal (TDSAT) against Trai’s clean chit to Jio’s free offers

The TDSAT last month asked Trai to clarify whether Jio had informed it and its subscribers of the two free offers — “Jio Welcome Offer” and “Jio Happy New Year Offer” — being “distinct”.

Trai had approved Jio’s free voice calling and data plan on its mobile services, claiming it was not a violation of the regulatory guidelines on promotional offers. The issue of Jio’s promotional offers disrupting the telecom market and adversely impacting the government revenue from the mobile operators in the form of spectrum usage charge was flagged by the then telecom secretary J S Deepak.(READ MORE)

Airtel, Idea, Vodafone in tug-of-war with Jio for customers with big bucks

LATEST BUSINESS NEWS - Reliance Jio arrived in India as a disruptive player, bringing free voice calls, data, scrapping roaming charges, etc. Along with flaunting its cheap offers, Jio has been sinisterly targetting users of its rival operators. This, in turn, has compelled other telecom firms to focus on high-paying customers.

Telecom operators' effort to battle with Jio

Recently, responding to Jio's launch of Prime subscription, under which the firm aims to retain its 100 million user base after its free services end on 31 March, Bharti Airtel introduced a Rs 145 and Rs 349 plan. The cheaper plan offers 14 GB data per month with a 500MB cap per day and unlimited calls to Airtel numbers. The Rs 349 plan has unlimited calls to all networks. Vodafone India is now offering 15 GB of data for the first three months at the same price and 6 GB thereafter, according to Livemint.

Reportedly, a person aware of Airtel’s plans said these plans are meant for customers who reach out to them proactively to move out of the network.

However aggressive the pricing war may be, it is the necessity of the hour, essentially as the telecom industry has lost about 20% of revenue due to Reliance Jio’s free services. (Read More)

ALSO READ: Telecom industry lost 20% revenue due to Reliance Jio giveaways: Ind-Ra

Bharti Airtel to buy Telenor India unit in response to Jio onslaught

Breaking news - Bharti Airtel, India's largest telecom network operator, is buying Norwegian Telenor's India unit, in yet another consolidation move in India driven by upstart rival Jio's disruptive pricing.

Bharti Airtel said on Thursday it will buy Telenor (India) Communications Pvt Ltd, as part of which it will acquire the Norwegian company's operations in six Indian states. It did not disclose financial terms of the deal.

The entry late last year of Reliance Industries' wireless carrier Jio into India's crowded telecom sector with its free voice and deeply discounted data plans has pushed rivals to slash costs, sharply eroding their profits.


Bharti Airtel reported its lowest profit in four years in the October-December quarter while No. 3 player Idea Cellular posted its first-ever quarterly loss for the same period.

Jio's gameplan is also sparking consolidation moves.

Britain's Vodafone Group said last month it was in talks to merge its Indian subsidiary with Idea Cellular to create India's largest mobile operator with about $12 billion in sales.

And earlier, Reliance Communications had entered into an agreement to merge its wireless business with smaller rival Aircel.(Read More)

Switch to Airtel 4G and get free data worth upto Rs 9,000 for 12 months

Breaking News - Country's largest telecommunications services provider Bharti Airtel today announced a special offer under which, it will offer free data for 12 months, worth up to Rs 9,000, to customers who switch to Airtel 4G.

With this, customers can now experience India's fastest 4G network at great prices. 

Company said offer will be available to the customers across India starting tomorrow and will close on February 28, 2017.

Prepaid users will get free 3GB data with Rs 345 recharge.

Shares were down 3% in afternoon trade.(Read More)

Price wars: Reliance Jio versus the rest in telecom battle

Breaking News - For a sector seeing double-digit revenue growth over recent years, FY16 marked a reversal. At Rs 2 lakh crore, the sector grew by six% ; it was nearly double this in FY11-15. Revenue growth for the September was only 4.3% over the year-ago period.

What is hurting the sector, riding high on strong voice growth and robust subscriber addition, is intense competition over the past 18 months. What has aggravated this is the entry of Reliance Jio (RJio), offering free voice and data services, from September. Despite reduction in the number of operators in the recent mergers of Reliance Communications-Aircel and Airtel acquiring spectrum from Videocon, competitive intensity remains high.

Amid all this, the top three have consolidated their market shares and now account for 75% of the overall revenue pie. The September quarter number is up 200 basis points (bps) over the year-before period.
In fact, Bharti’s market share at 33% is at a seven-year high. Among the others, Vodafonehas held on to its share of about 23.4%; Idea Cellular has slid. Revenue market share for Idea was down 50 bps year-on-year in the September quarter to 18.7%, partly attributable to its decision to raise prices in the March quarter.(Read More)