Airtel bridges market share gap with Jio amid tariff hikes

Bharti Airtel reporting incremental an incremental Adjusted Gross Revenue (AGR) of ₹41 billion over market leader Reliance Jio’s ₹35 billion in Q2FY25, despite the tariff hike churn. While Airtel’s market share went up 19 per cent YoY, Vodafone Idea (Vi) continues its uphill climb as its market share dipped 14.6 per cent, as per an ICICI Securities report. This brings the industry AGR to ₹636 billion, a growth of 13.9 per cent YoY.

“Airtel’s AGR (incl. NLD) market share stood at 39.1 per cent, up 81bp Q-o-Q… Airtel is consistently narrowing its market share gap vs. Jio. Vi’s AGR market share dipped 35bp QoQ to 14.6 per cent, pending acceleration in data network rollout. Jio’s market share fell 50bps QoQ to 42.2 per cent, as its tariff hike benefits come with a slight lag vs. peers due to higher mix of long validity recharge subs,” said the report, adding that AGR growth will continue to benefit till Q4FY25, as the tariff hike gets absorbed completely.

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Professor V Sridhar from the International Institute of Information Technology in Bangalore told businessline that he did not foresee any porting tussle between Airtel and Jio, despite the bridging gap, since both companies are at par in terms of technology deployment and pricing. However, he anticipated a lot of porting between Airtel and Jio with Vi. During the Q2FY25 earnings call, Vi said that it registered a loss of 5.1 million subscribers to BSNL.

Earlier this year, all three private telcos had revised their tariff rates, resulting in many customers moving towards BSNL for more affordable rates. Mobile Number Portability (MNP) requests to go from 11.84 million subscribers in June 2024 to 14.66 million subscribers in August 2024. However, companies not only benefited from this move, but many reported a return of customers.

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According to IIFL Securities report, “The churn to BSNL has significantly slowed down recently due to its network quality issues. Some retailers even called out customers porting back to Jio and Airtel.”

Aside from network issues, Sridhar said that the churn has slowed down because businesses are taking the brunt of the tariff hikes.

“We are still very cheap with respect to retail segment. Our retail tariff is about $0.16 per GB, whereas the global average is about $2.59 per GB and the Asia average is about $1.10 per GB. So, what telcos normally would like to do is to subsidize the retail tariff by the higher tariffs in the business sector. They also provide a telecommunication service on a wholesale basis to small and medium enterprises, large enterprises, etc. Now, the tariffs for them is still high, especially the lease line tariffs for SMEs,” said Sridhar.

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He added that any telco seeking positive results hereon should focus on the quality of service over pricing, stating, “Indian telecom operators have on average 850 megahertz (MHz) of spectrum in a particular service area, which is actually more than most telcos even in developed countries. So, telcos have a lot of spectrum but not in the low frequency range, which is very much required for indoor coverage. We botched it. Nobody picked it up because of the high reserve prices. But they have enough spectrum. So, they should put micro cells, macro cells and provide good coverage. That’s the most important thing these telcos have to do, instead of just playing out with the tariff. Quality of service is pretty bad in India even though it is said that 4G coverage has reached 80 per cent, 5G coverage is 50 per cent and so on.”