Jio’s frantic pace of subscriber addition has been widely reported. The company on an average has been adding as many as 20 million subscribers every month. It passed an important benchmark when on February 21, it grossed around 100 million subscribers. [stories-so-far title=”Stories So Far” post_ids=”90367, 85361,85165, 82870, 78759″] According to official TRAI data, by the end of December 31, 2016, Jio had around 72 million customers. This means that between December 31st and February 21st, Jio added 28 million subscribers in 52 days or approximately 5,38,000 (more than half a million) subscribers every day. Going by that rate, Jio would probably have around 120 million subscribers by the end of March 31, 2017. Jio’s subscriber additions did not provide much meaning. After all, by virtue of providing SIM cards for free, it meant that almost all of it was inorganic. The entire industry was eagerly waiting to see how many people would actually pay for Jio’s services and that became clear yesterday. As it turns out, contrary to my own expectations and that of several others, a whopping 72 million people have paid to enroll themselves in Jio’s prime membership program. The statistic in itself is meaningless but now that it has been made known, a lot can be derived from this.
1. 75 percent of Jio’s current active subscriber base is ready to pay for its services!
Assuming that Jio has sold 120 million SIM cards by March 31, 2017, 72 million prime members mean that at least 60 percent of those SIM cards have paid at least Rs 99 to Jio, which signals an intention to continue using the service even if people were to be charged for it. But the statistic becomes rosier to look at when we take into consideration VLR (Visitor Location Register) data. VLR data helps us know the number of active subscribers on a particular network. As of December 31, 2016, Jio’s VLR percent or the number of active subscribers on Jio’s network stood at 80 percent of the overall subscriber base. Since Jio has not opened its network to other operators for roaming purposes, one can be assured that the VLR data on Jio is 100 percent indicative of Jio’s active subscriber base. 80 percent of 120 million SIM cards amounts to 96 million active subscribers on Jio’s network. Out of 96 million active subscribers, if 72 million have registered for Prime membership, then this indicates that a whopping 75 percent of Jio’s current active subscriber base is ready to pay it for its services. Make no mistake, 75 percent is a very impressive number and while there might be several people who have not recharged anything more than Rs 99 on Jio, its value as a pricing signal cannot be understated. The fact of the matter is that if someone was not interested in continuing with Jio, they would not even have bothered to spend Rs 99 on it but the very fact that as many as 75 percent of Jio’s active subscriber base has paid at least Rs 99 to Jio means that people are willing to pay if they feel that Jio can provide them the best deal in town.
2. It’s official: Jio is India’s largest broadband provider
Theoretically, Jio’s position as India’s largest broadband provider was already achieved somewhere between November and December if one goes by the number of SIM cards sold. While Airtel had around 50 million broadband subscribers or so between November and December, Jio was higher by virtue of selling a higher number of SIM cards and being a 4G/broadband only operator. But what needs to be taken into consideration was that almost all of Airtel’s 50 million broadband subscribers were paying Airtel but none of Jio’s subscribers were paying subscribers. Now that Jio has announced it has enrolled 72 million subscribers in its Prime membership, it can very comfortably call itself India’s largest broadband provider and rightly so. Even if some of the 72 million Prime subscribers don’t recharge with a Rs 149 or Rs 303 plan, Jio would, for the most part, remain India’s largest broadband provider.
3. Be scared, Airtel, Vodafone and Idea; Be very scared
Airtel, Vodafone and Idea had, for the most part, been banking on the idea (no pun intended) that the vast majority of Jio subscribers were using it just for the freebies and would dump the SIM once they got over. However, that clearly has not happened. With 75 percent of Jio’s active subscriber base paying for its Prime membership, it has become a very serious and formidable competitor in a very short span of time.
With 72 million Prime members or data/broadband subscribers, Jio is now bigger than most of its competitors. It took close to seven years for Airtel to build a subscriber base of 50 million broadband subscribers or so. Jio has built a base of 72 million prime/broadband subscribers in 7 months. As of Q3 2017, Idea had around 2.5 million 4G subscribers. Jio’s 72 million prime subscribers effectively mean that Jio’s 4G subscribers are close to 30 times more than Idea’s. All said and done, Jio is in a zone of its own. Especially when it comes to 4G, Jio’s market share is not a few percentage points higher than it competitors but is actually higher in multiplier terms. At least when it comes to 4G, Airtel, Vodafone and Idea seem to be in deep trouble. Jio has managed to gain a massive head start over them. Before having any subscribers ready to pay for its services itself, Reliance invested close to USD 25 billion in Jio. Now that Reliance knows that as many as 72 million subscribers and maybe, even more, are ready to pay, the investment in Jio will only rise further. While investment in Jio would go upwards, Jio shows no signs of letting its competitors have any breathing space. The price war and the balance sheets of telcos will continue to be in red for several quarters ahead.
4. Jio would have to make massive capacity investments
If the vast majority of the 72 million prime subscribers opt for the Rs 303 plan (or above) then Jio would have to make some serious capacity investments so as to maintain the quality of its network. Ookla has already declared Airtel as the fastest network in India. Even though the methodology is being contested by Jio, the review done by Ookla still places Airtel at the top. Apart from Ookla, even Open Signal has placed Airtel as the fastest network in several cities.
While 72 million would be a noticeable drop from the current 120 million free subscribers on Jio’s network, it is still a huge number nonetheless. There will undoubtedly be pockets in several metro cities where Jio’s network might come under stress because of the rather generous 1GB/day FUP. The only way for Jio to tackle this would be to increase capacity through a mixture of small cells and more spectrum. Jio is yet to deploy the spectrum that it won in the last spectrum auction and carrier aggregation is still not widespread on Jio’s network. Jio’s plans for small cells remain sketchy but all of this needs to be done if the quality of service is to be maintained.
5. The highest ARPU in the industry?
By now it’s clear that Jio is trying to push its Rs 303 plan the hardest. Value wise, the Rs 303 plan beats the Rs 149 plan any day. Depending upon the number of people who opt for 303 and 149 plans, Jio’s ARPU can range anywhere from Rs 230 to Rs 270. If the number of 303 plan takers significantly outweigh the number of 149 plan takers then the ARPU can be somewhere around the ballpark number of Rs 250-270. If the 149 plan has a decent number of takers, then the ARPU would be on the lower end of the spectrum at Rs 230-250. Regardless of what the final ARPU ends up being, it would be much higher than the industry average of around Rs 170-220. That said, it is best to take the ARPU estimate with a huge barrel of salt considering how Jio is changing the tariff of its plans almost every quarter.
Conclusion
Many of us had predicted that once Jio’s free offer was over, most people would get rid of their Jio SIMs but the prime membership statistic reveals that a decent number of people would cling onto their Jio SIM even if they are asked to pay for it. This goes on to prove that the demand for data and the addressable market for it can actually be huge, which is good news for both Jio and its competitors. The only thing that was needed was for someone to make an aggressive entry and tap into the market, which is exactly what Jio has done. All said and done, this is brilliant execution by RIL. Being able to gain so many subscribers and convincing them to pay up for data in such a short period of time is nothing short of remarkable. What entrenched players like Airtel could not accomplish in years, Jio has done in months. We are witnessing a phenomenon. And something tells me there’s more to come.
