Jio’s market share increases with increase in capital expenditure

Chennai: Jio’s market share increases after it raises stakes with higher capital expenditure. A larger share of Jio’s incremental subscribers are mostly coming from rural areas in recent months due to the higher sale of its feature phone, JioPhone.

 Graphic source- Mint

In the past six trading sessions, shares of Bharti Airtel Ltd and Vodafone Idea Ltd have fallen 6.2% and 12.5%, respectively, in value. Year till date, these stocks have declined 32% and 62%, respectively. In contrast, shares of Reliance Industries Ltd (RIL), which houses the mammoth Reliance Jio project, have fallen merely 1.9% in the past six trading sessions. Year to date, RIL shares have gained 34%.

Subscriber numbers released by the Telecom Regulatory Authority of India show that the pace of Reliance Jio’s market share growth has accelerated in recent months. The company had relaunched its feature phone called JioPhone in July, which helped its subscriber count grow by 11.8 million in the month. This was much higher than the average monthly addition of 9.5 million subscribers in the previous four months. On the other hand, Bharti Airtel’s wireless subscriber base rose by just 300,000, while the Vodafone-Idea combine’s subscriber count rose by 600,000, in July. It was the lowest rate of subscriber addition in the past 10 months.

Image source-

A larger share of Jio’s incremental subscribers are coming from rural areas in recent months, suggesting higher sales of its feature phone. The Arpu (average revenue per user) in this segment is far lower compared to the smartphone segment. As such, revenue growth may be slightly lower than subscriber growth.

Jio’s growth is coming on the back of an increased thrust on capital spend. Cash burn can be expected to remain at high levels this year as well.