Reliance Jio is behind rival telecoms such as Bharti Airtel, Idea Cellular and Vodafone on network coverage and reliability, the most important attributes highlighted by Indian wireless subscribers, said UBS Securities.
Reliance Jio Infocomm is at par with Indian telecom operators on mobile data speeds and slightly behind in voice quality, said UBS Securities in its research note – based on a survey by UBS Evidence Lab.
Key survey takeaways:
# Jio remains behind peers on network coverage and reliability, the most important attributes highlighted by subscribers.
# Jio is at par with peers on data speeds and slightly behind in voice quality.
# UBS evidence lab survey suggests nearly 1/3rd of respondents are Jio users, but nearly 50% of them use it as a secondary SIM)
# Recently launched bundled plans by incumbents suggests pricing gap with Jio has narrowed
Though Reliance Jio’s biggest advantage lies in value for money position, rivals have followed Jio’s promos aggressively, limiting meaningful price window for Jio.
UBS Securities estimates that Jio will have a revenue share of 5.7 percent in FY18E, gradually rising to 9.8 percent by FY20E.
The launch of Reliance Jio’s free offers and packages will impact revenue in the short term, with q-o-q revenue declines of 6-7 percent in Q4FY17E, following similar revenue declines in Q3FY17.
Reliance Jio’s mobile data pricing is not dilutive to data ARPUs, which currently stand at Rs 150-200.
Voice substitution will be triggered due to free unlimited calling. Industry revenue will drop 4 percent in FY17 and grow 1.7 percent in FY18, below the 9-11 percent growth in FY14-15.
Capex (capital expenditure) for Indian telecoms will remain at around 20 percent for the next 2-3 years. The higher number of towers and infrastructure sharing should keep Indian Capex below the levels in China and ASEAN at >25 percent of revenues.
Jio will have 122.8 million subscribers as of FY18E and 145.3 million by FY20E.
Among the Jio users, roughly 64 percent are very satisfied and another 31 percent are “somewhat” satisfied with the service, implying an overall high satisfaction ratio.
Jio’s satisfaction levels are higher than other incumbents and almost comparable to Bharti Airtel.
Jio comes out ahead of peers on data speeds, value for money and attractive promotional packages, but materially below peers — particularly Airtel — on network coverage, reliability and in-building network reach.
Reliance Jio’s voice quality is not materially below incumbents. Jio is behind incumbents on attributes such as customer service, technical support, which could be a medium-term challenge: as a new entrant, it is critical for Jio to provide a good experience to customers who try out its services.
Among the current users, percent who will definitely change their mobile carriers are the highest for Jio, though the gap with the incumbents is not massive.
Jio also has the highest percent of subscriber who will definitely not change at 19 percent compared to 11-14 percent for the other incumbents, testifying to its attractive value for money proposition.
The telecom research report said good network coverage, availability and reliability are the most important factors, followed by data speeds and voice quality. The biggest concern for an Indian wireless subscriber is the inability to make a call or access Internet when he or she needs to. Price / promotion is important for only 52 percent of subscribers.
