After initial flash-bang, Reliance Jio growth slumps over 50%
18 Nov 2016
Despite expanding distribution channels from Reliance-owned retail stores as well as other outlets, Reliance Jio Infocomm Ltd is now seeing slow subscriber growth and the subscriber run rate has fallen to less than 50 per cent after the first 15 days of the launch.
The company's sale of SIM cards has been further hit after the government's demonetisation move as there has been a 40-50 per cent dip in the footfall in comparison to last month, Motilal Oswal noted in a 16 November report.
Considering that the services of Reliance Jio have not been able to make a mark, analysts expect it to extend the welcome offer to achieve its 100-million subscriber target. ''RJio had targeted to reach 100m subscriber base by Dec 16. If RJio is unable to achieve this target, there is high probability of extension of the Welcome Offer beyond Dec 16. Channel partners see high risk of subscriber churn post the Welcome Offer, as most subscribers are using Jio as a second SIM to take advantage of free offerings,'' Motilal Oswal analysts said.
The reasons for this attrition in subscriber growth are back-end IT issues, poor customer services and weakness in distribution channels. ''While the company is trying to make progress on these fronts, it gives incumbents a buffer of 12-18 months to further capitalize on their strengths,'' the report said.
The consumers are witnessing a fall of about 70-80 per cent in speeds over the last three months and the high usage during the free offer period has been worsening the case for Reliance Jio. Considering that Reliance Jio has been directed by the Telecom Regulatory Authority of India (Trai) to wind up the free offer period by 3 December 2016, the company is expected to introduce price plans to target the mass market of Rs200-300 APRU (average revenue per user) subscribers.
Reliance Jio launched its services commercially on 5 September and announced a free welcome offer with unlimited data and voice for subscribers till 31 December 2016, which now as per Trai guidelines has been limited to 90 days, till 3 December 2016.
The change in consumer pattern for data and voice shows that despite call drops and poor voice quality, customers of mainly voice remain loyal to their service provider. However, for extensive data users, poor services trigger shift from one operator to another, indicating that expectations of data customers varies from voice customers, the report said.
