Jio, Airtel SG&A costs rise signals cut-throat competition for acquiring high-value customers

Kolkata: India’s top two telcos, Reliance Jio and Bharti Airtel, have seen sequential increases in their respective selling, general and administrative (SG&A) costs in the fiscal first quarter, suggesting a continuing phase of intense competition for acquiring and retaining high-value customers, said analysts. More so, amid some SIM consolidation after the recent tariff hikes, they added.

Loss-making Vodafone Idea (Vi), by contrast, has seen a sequential dip in its SG&A spends in the June quarter, which according to analysts, is since the telco is using the cash recently raised to initially improve its 4G coverage quality to rein in customer losses.

Analysts, though, expect Vi to also turn aggressive on the SG&A front in the coming quarters, especially once it improves 4G coverage in priority markets, rolls out 5G in key cities and looks to slug it out with its bigger rivals, Jio and Airtel, in the battle for high-value customers.


As per company data and ICICI Securities estimates, Jio and Airtel’s SG&A costs have risen 4.2% and 3.2% on-quarter to Rs 1,455 crore and Rs 2,805.6 crore, respectively, in the April-June period. Vi’s quarterly SG&A expenses, in turn, have declined 3.2% sequentially to Rs 1,135.4 crore, company data and IIFL Securities estimates showed.

“Increasing SG&A costs is an indicator that telcos also continue to incentivise mobile number portability (MNP) through higher channel payouts,” Vinish Bawa, partner & telecom leader at PwC India, told ET.

According to analysts, SG&A costs comprise sales and marketing (S&M) expenses such as cost of customer acquisition and advertisement/promotion spends along with other expenses such as content costs, bad debt provisions and miscellaneous expenses.

Another analyst at a leading global brokerage said Jio’s higher sequential growth in SG&A costs is partly reflected in its stronger 7.9 million subscriber additions versus 2.26 million for Airtel, even while Vi lost 2.5 million customers.

Industry executives, though, said Airtel’s SG&A costs are still almost double that of Jio’s as the Sunil Mittal-led telco’s premium branding and pricing strategy remain vital for acquiring and retaining high-value customers as well as sustaining its higher average revenue per user (ARPU) compared with the telecom market leader. Airtel’s ARPU—a key performance metric—at Rs 211 was almost 16% higher than Jio’s Rs 182 in Q1FY25.

Analysts also expect a financially-stronger Vi, post its targeted debt raise, will increase competition in the telecom sector and keep selling and distribution (S&D) costs—a key element of SG&A costs—elevated. “A more aggressive Vi, post-its fundraise, is likely to play a role in the battle for subscriber acquisitions,” IIFL Securities said in a research note.

On the heels of its Rs 24,000 crore fundraise via equity, Vi is in discussions with lenders to raise another Rs 25,000 crore via loans and an additional Rs 10,000 crore of non-fund-based facilities to drive its Rs 55,000 crore targeted network capex plans over the next three years.

Analysts also expect the headline rate hikes taken last month to start driving some ARPU uplift for the three private carriers from the current fiscal quarter. The full benefit of the tariff hike, though, is estimated to come only by the fiscal quarter ended December.