Jio likely to remain market leader for next 2 years despite tariff hike, say analysts

Kolkata: Reliance Jio Infocomm is likely to continue leading India’s telecom market over next two years regardless of the recent tariff hikes, analysts said, though the pace of its subscriber additions may slow.

“Jio’s dominant position in terms of market share growth and data usage will sustain comfortably for the next 18-24 months, given its superior data speeds and 4G network coverage, even post change in tariffs,” Centrum Institutional Research said in a note. The brokerage expects Jio’s pace of customer additions to slow, following the recent increase in tariffs. Centrum estimates a “more moderate” subscriber growth of 5.5 million to 6.5 million users a month in FY22 compared with 10 million in FY19 and 8 million to 8.5 million currently.

Bharti Airtel, Vodafone Idea and Reliance Jio increased their bundled prepaid tariffs by 14-33% in early December. Analysts said Jio’s new prepaid tariffs remain the cheapest in the market.


Brokerage CLSA said Jio’s 28-day and 84-day prepaid plans – offering 1.5 GB of data a day – are 20% and 7% cheaper than Bharti Airtel and Vodafone Idea’s latest comparable offerings. Centrum backed the view, saying Jio’s plans across price-points remained the most attractive despite material increases in the tariff plans.

Analysts, however, said Airtel and Vodafone Idea’s new Rs 399 plan with 56-day validity offering 1 GB data a day is comparable with that of Jio’s. According to analysts, Airtel and Vodafone Idea are likely to ring in 40% tariff increases by FY22. They said Vodafone Idea’s higher spectrum debt and adjusted gross revenue (AGR) payment dues make the stock’s risk/reward unfavourable.

CLSA said Jio’s Rs 98 prepaid plan, offering 2 GB a month, is an incoming-only plan for voice services, while the Rs 149 plan offering 1GB a day limits voice calls to other networks to 300 minutes. Airtel’s plan spends, by comparison, are “10-19% higher but the lure-in is the unlimited voice calling,” it said.

Vodafone Idea shares fell 4.5% to Rs 6.61, while Airtel shares declined 1.4% at the close on the BSE Monday.