As per the latest findings by Fitch Ratings, Reliance Jio may achieve its 100 million subscriber base by March 2017. However, the credit rating agency also predicts that the numbers might shrink thereafter when Reliance Jio starts charging for its services.
Nitin Soni, Director at Fitch Ratings, said in an interview – “We think that Jio is adopting a very sound strategy of offering free voice and text services and free data till the end of March to bolster its subscriber base. They currently have 52-55 million subscribers and it could well increase to 100 million by end of March, but we will need to remember that these are free services,”
“So as long as it is free, even a customer who is a customer of Airtel or Idea will still take a free Jio SIM to enjoy free services for the next three months. But I think there will be some churn when Jio will start charging from April 1 and that churn may well reduce the subscriber base by 5-10 percent,” he added.
The reasons Soni stated above seems legit as Reliance Jio hasn’t made it as the primary network for its users. Most of the users use it as a secondary SIM for free internet and sometimes for free voice calls. Contrary, if Jio manages to win the trust of the people and continue to offer services at much cheaper rate, then we might see the numbers jump even higher after March 2017.
Commenting on the possible challenges to existing telecom operators, Soni claimed that the weaker telecom operators will be most affected in this case. Further, he also emphasized on the possible challenges faced by Idea Cellular as they lack 100 percent 4G spectrum asset on a pan-Inida basis.
Further, talking about the mergers and consolidations he added – “The consolidation has been going on, we have seen Reliance Communications acquiring MTS, and then merging its operations with Aircel. And some of the weaker telcos are looking also to exit the market. But we believe that there could be some more consolidation in the medium term,”
Nevertheless, Soni claims that the over all data tariffs go down by 15-20 percent which will anyway benefit the customers. He also pointed out Airtel’s strong market position due to its lot of spectrum asset ownership of 900 MHz bands which will eventually help the telecom operator to stand strong against Jio.