Reliance Jio helped India save Rs 18,000 cr, but rivals took the hit

Free services from Reliance Jio, the telecom services arm of Reliance Industries, brought down the amount of money paid by telecom subscribers in India by about Rs 4,400 cr in just the last three months of 2016, an analysis of the sector data revealed.

The numbers indicate that the company’s free offers have helped Indians save a total of around Rs 18,000 cr so far.


Till October, the impact of Jio was negligible due to its low subscriber base. At the beginning of the October, for example, the operator had only 16 mln subscribers.

But it soon started adding subscribers at a tremendous pace. [polldaddy poll=9719512]

It added 56 mln in the next three months, taking its total users to 72 mln by Dec 31.

However, it did not charge a single rupee from any of them.

Because of this, the total money paid by telecom subscribers in India to various telecom service providers fell to Rs 37,284 cr for the three months starting October compared with Rs 41,681 cr in the preceding three months (July to September).

In fact, the actual savings to consumers was probably higher than what these two numbers suggest as overall revenue of existing operators started falling from July onwards, when they slashed their prices in anticipation of the September launch of Jio.

As a result, if one compares the revenue generated by these operators in Oct-Dec of 2016 (37,284 cr) to what they generated in Apr-June (44,754 cr), the savings for the consumers is around Rs 7,500.

The savings in the three months further rise to around Rs 7,900 cr or so when adjusted for the natural growth of subscribers in this period.

Though subsequent industry revenue numbers — for January to March 2017 — are not available, it is likely that Jio dented rivals’ revenue by another Rs 9,000-11,000 cr this year due to its increased scale of operations. This impact takes into account both the direct loss of volumes as well as price corrections made by rivals since mid-2016.

In all, therefore, existing players like Bharti Airtel, Idea Cellular, Tata Teleservices and others lost the chance to get about Rs 18,000 cr from their subscribers from October last year to March this year.

While this may be good news for consumers, it means that the companies’ finances have come under pressure, forcing the TRAI to intervene.


The fall in revenue had a direct impact on the average amount paid by each subscriber to their telecom provider, also known as ARPU.

The average amount of money spent by one telecom consumer in India fell by Rs 20 in the last three months of 2016 to just Rs 111.63 per month. Compared to Apr-June period — just before price cuts by incumbent operators — the fall was of Rs 30, a decline of 21%.

Chances are that by the end of March 2017, the average revenue paid by a single subscriber in India is likely to have fallen below Rs 100 per month — a decline of 30% over a period of nine months.


Even though subscribers may have saved around Rs 7,900 cr in the second half of 2016 due to Jio’s free services, the government also lost around Rs 900 cr of revenue in the form of lower spectrum usage charges and license fees due to this.

Included in this is a fall of Rs 622 cr in the form of lower spectrum usage charges and license fees in the Oct-Dec period.

However, given that consumers are likely to have spent their saved amounts on some other service or product, most of the revenue lost in telecom would reappear in the form of higher revenue from other products and services.


The biggest victims of Reliance Jio’s free services seemed to have been the data-focused CDMA operators such as Sistema (MTS), Reliance Communications and Tata Teleservices, even though Bharti Airtel was also hit hard.

Sistema’s adjusted service revenue fell 27% in the last three months of 2016 compared to the preceding three months to Rs 274 cr .


RCom’s revenue fell 14% to Rs 968 cr and Tata Tele’s service revenues fell 13% to 2,209 cr.

Among the large operators, the biggest impact was on Bharti Airtel, whose adjusted access revenue fell 8% in the final three months of the year to 11,495 cr. Airtel accounted for nearly Rs 1,000 cr out of the 4,400 cr of revenue decline that the industry saw in the final three months of the 2016.

In comparison, Vodafone’s revenue fell only 5.1%, while that of Idea Cellular declined by only 4.9%. BSNL saw a revenue decline of 4.2% and Telenor 1.8% (see chart below).