Motabhai's Jio End is near ?
Reliance Jio is the most important subsidiary for the Reliance industries, contributing 26% of the net profit of RIL and 11.6% of the net revenue of RIL.
Jio Platforms Limited holds all the digital assets of the RIL subsidiary and all the digital business assets, including Reliance Jio Infocomm Ltd, which in turn holds the Jio connectivity business (mobile, broadband, and enterprise), as well as the other digital assets and investments in other tech entities.
Now everything is looking good, but the problem starts when Reliance Jio increases their mobile tariff, that’s, during the time when photos & videos of Anant Ambani’s Lavish 600 million $ wedding are going viral all over the internet.
Reliance Jio’s this decision, after years of dominating the market with low tariffs and high-speed data, sent shockwaves across India, a country where affordable connectivity had become a lifeline for millions.
This decision was a turning point not only for Jio but for the entire telecom industry because Airtel, the second biggest player in the market, also announced tariff hikes after Jio’s action.
But when every private player was making most of the situation and was increasing the tarrif, BSNL, the state player, refused to increase tarrifs.
“We can clearly say we are not going to increase our tariffs in the near future, We don't see any need for tariff hikes in the near future."
-Robert Ravi, Chairman & MD of BSNL
Are tariff increases a masterstroke?
You might be surprised to learn that the tariff increase turned out to be a masterstroke by telecom players. While major players experienced a decline in their user base, the profitability and ARPU (average revenue per user) of the telecom sector saw a remarkable 9.6% increase : the highest since Q1 FY22.
While Airtel’s ARPU increases by 14.7% QoQ, from 203 to 233 in Q2 FY24, and Jio’s ARPU increases by 7.4% QoQ to 195 from 181.
Not only ARPU, the Tarrif increase also boosts the bottomline; for Jio, net profit increases by 23.4% YoY, and for Airtel, profit increases by 14.7% YoY.
A Month-by-Month Tale of losing & gaining users
July: BSNL Makes a Splash
July was tough for everyone—Jio, Airtel, and Vi all lost users, with Vi losing 1.41 million and Airtel even more at 1.69 million. But BSNL? It added 2.93 million users, surprising everyone and giving hope to its loyal fans.
August:
BSNL added 2.53 million users, but Jio and Vi were struggling, with Jio losing 4.01 million users and Vi 1.87 million, and Airtel losing 2.4 million users.
September
Jio lost a whopping 7.96 million users, the biggest loss of the year. Jio and Airtel also saw declines, but BSNL gained 0.84 million users.
October:
While Jio and Vi continued losing users, BSNL added 0.51 million users and Airtel gained 1.92 million this month. Jio has a big number of 3.76 million users this month.
The Final Tally
By the end of October, Jio was still the leader with 39.9% market share and 460 million users, followed by Airtel with 33.5% and 385.41 million users. Vi struggled with 18.3% market share and 210.47 million users, and BSNL stood at 8.05% market share and 92.39 million users.
Even though Jio saw its overall subscriber base growing down QoQ, the subscriber base was actually up YoY by 4.2%. Also, Jio's 5G subscriber base grew by 17 million during the quarter. Jio's 5G subscriber base grew from 130 million to 147 million.
What’s Next?
The company experienced a significant shift in its user base, but experts say this trend is common. Whenever a company raises its tariffs, many users tend to switch their loyalty.
Even though Reliance Jio lost 110000000 users in the second quarter, primarily due to a hike in tariffs, Mukesh Ambani was not concerned by the loss. Despite approximately 11 crore users leaving Jio, the company maintains a strong hold on its 5G customer base.
Also, Mota Bhai plans to take Jio public in 2025, aiming for a whopping $120 billion valuation. The IPO aims to raise $4-$5B, potentially becoming India’s biggest, surpassing Hyundai’s ₹27,870 crore debut last year.