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RJIL may continue tariff war until it levels RMS with VIL and Airtel, says Citi Research

January 18, 2019
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According to Citi Research, Reliance Jio Infocomm Limited (RJIL) will continue providing services at low tariffs until it comes at par with Vodafone Idea Limited (VIL) and Bharti Airtel in terms of revenue market share (RMS) in the metro and Category A circles of the country.

As per the latest data collated by the Telecom Regulatory Authority of India (TRAI), the metro and Category A circles collectively account for 53 per cent of the telecom industry’s adjusted gross revenue (AGR). This is a big opportunity for RJIL.

At present, RJIL’s RMS in Delhi is 28.5 per cent while that of Airtel is around 39 per cent. Likewise, RJIL’s RMS in Mumbai and Kolkata is 24.2 per cent and 17.8 per cent respectively. This is quite less than VIL’s RMS in Mumbai and Kolkata at 38.7 per cent and 43.4 per cent respectively.  Similarly, RJIL’s RMS in Maharashtra circle is 28.8 per cent while that of VIL is 47.3 per cent. In Karnataka too RJIL’s RMS of 20.5 per cent is below Airtel's RMS of 48 per cent.

Nonetheless, RJIL leads on the RMS score in the Category B & C circles that account for around 47 per cent of overall industry AGR, says the firm.

Citi Research expects competitive intensity to persist as Jio is likely to continue disrupting the market, especially since bulk of its strong customer additions are being driven by the rapid uptake of its low-cost voice over long-term evolution (VoLTE) feature phone, called JioPhone.

Further, it expects Jio, to continue to keep tariffs low so long as its pace of monthly subscriber additions remains strong, especially as it continues to deliver strong sequential revenue growth and also grabs market share.

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