Snapshot
- The government will need to be ready to provide easier terms for existing telecom players in terms of their spectrum dues in order to retain the competitive element in the industry.
Some 18 months ago, Reliance Industries made a presentation to analysts predicting that the dual-SIM market will crash with a shift in market preference from voice to data.
The presentation (see here), apart from setting Reliance Jio a target of achieving a 50 per cent market share by 2020-21, also predicted a drop in industry voice revenues from Rs 1.5 lakh crore to just Rs 0.5 lakh crore. The rest of the Rs 3 lakh crore revenues of the industry is to come from data.
It also predicted a sharp drop in the overall SIM card base by more than 300 million, as data can occupy only one SIM slot, and if an operator can provide both data and voice on the same SIM, the second SIM is pointless.
As things stand today, the forecast may well materialise, for Jio’s main competitors – Airtel and Vodafone Idea – are not only bleeding profusely, but also busy trying to dump low-revenue subscribers by hiking recharge tariffs. One report suggests that some 60 million 2G voice subscribers, many with double SIMs, will be shed, half of it in the next six months.
Both Airtel and Vodafone Idea are currently heavily dependent on 2G voice subscribers, with the former having 250 million of them out of a total subscription base of 346 million (around 72 per cent), and the latter 346 million out of a total customer base of 442 million (nearly 78 per cent). Jio, in contrast, has no 2G SIM, and its 250 million users are all 4G-enabled. It is clear who will lose market share in the coming fight as both Airtel and Vodafone Idea raise recharge rates to shed low-value customers who are a drag on margins.
At last count, Business Standard (26 November) reported average revenues per user at Rs 132 for Jio, Rs 100 for Airtel and Rs 88 for Vodafone Idea.
But if Reliance’s projection of a loss of nearly 300 million dual SIMs by 2020-21 is correct, and most of the user losses are shouldered by Airtel and Vodafone Idea, it will become market leader very soon.
This shift in market share will also impact mobile phone manufacturers, who will now have to reduce their production of dual SIM gadgets and focus on single SIM phones.
An Economic Times report says that some 750 million subscribers have only one SIM, and the remaining 350-400 million have two of them.
The shift is going to cost a huge loss of user base, and the future fight will be about milking higher-value users for more revenues, and not about horizontal growth in new users. The industry may well have to grow its urban base further. Currently, according to Telecom Regulatory Authority of India data, urban users have 647 million SIMs and rural ones 519 million, totalling 1.166 billion in all. If some 300 million SIMs are going to be culled, a bloodbath lies ahead. More so since Reliance is already moving into cable homes, with the purchase of majority stakes in Hathway and Den Networks.
The government will need to be ready to provide easier terms for existing telecom players in terms of their spectrum dues in order to retain the competitive element in the industry.
