And then there were four: death in Indian mobile

16 January 2018 | Alan Burkitt-Gray

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The Indian mobile business is looking like an Agatha Christie murder story. In 2014 there were 13 operators in the business in India, from Bharti Airtel with 22.53% of the market down to Quadrant with 0.24%. Soon there’ll be four or five.

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The industry is going through a process of rapid consolidation, forced upon it by a reaction to Reliance Jio, which launched its 4G services in September 2016. Jio, owned by Reliance Industries, came in with a launch offer of free voice calls and data at 50 rupees ($0.75) a gigabyte. 

In competition, market leader Airtel now offers subscribers 10GB a month on 3G and 4G networks for 399 rupees ($6.25). If you want to use 50GB in a month, it’ll cost the equivalent of $15.60. Those rates include unlimited calls – and users of more than 20GB get live TV and movies too. 

Even 2G users are getting good deals. In December 2017 Vodafone India offered unlimited calling throughout India and unlimited 2G data for just $2.80 a month. 

“India is the largest user of bandwidth in the world,” said Bill Barney, CEO of Global Cloud Xchange (GCX), speaking to Capacity in an interview for this issue. “It was the fifth largest before Reliance Jio.” 

Barney’s company is owned by Reliance Communications (RCom), which has nothing to do with Reliance Jio except that both are run by warring siblings – a fact that has added an extra dimension to the business mess that is Indian mobile communications. Mukesh Ambani is chairman of Reliance Industries, which owns Jio. His brother Anil Ambani owns RCom. Both are offspring of Dhirubhai Ambani, who died in 2002 after building up the industrial group. 

The Jio competition began to bite as 2017 started. At the end of 2017, market shares are very different, according to the Telecoms Regulatory Authority of India (Trai), the regulator. There are 1.18 billion wireless subscriptions, says Trai, on top of 23.5 million wireless connections. 

Bharti Airtel has nudged up to a 24.21% share on 31 October 2017. Trai still lists 10 operators, with Sistema at the bottom, with just 0.28%. Jio is fourth with 12.39% at the end of October, but has shown the fastest growth, putting on more than 7 million customers in October alone. RCom lost nearly 11 million, and Tata lost 4.7 million. The whole market lost 4.8 million customers: many users have dropped the idea of having two or three SIM cards as Jio and others bundle cross-network calls into their deals. 

Bharti Airtel is set to buy Tata Teleservices, the mobile arm of the industrial group that also owns the unaffected Tata Communications. In 2017 NTT DoCoMo bailed out of its partnership with Tata Teleservices after the Tata group came to a settlement. In another deal in 2017, Bharti Airtel took on Telenor’s heavily loss-making operation in India. That will give Airtel a market share of 31%, based on October 2017 levels. 

Vodafone and Idea Cellular are set to merge in 2018, giving the combined company a market share of 34%, again based on those October 2017 numbers. 

RCom bought MTS India, the brand name of the Russian-owned Sistema group, and it was due to buy Aircel, but the deal fell apart – as RCom effectively decided to close down its mobile business and focus on enterprise telecoms and its GCX international cable business. 

“We’re closing down the wireless business and selling off our spectrum and our tower real estate,” said GCX’s Barney, who is also co-CEO of RCom, in that Capacity interview. “Four operators have exited the [mobile] market – Tata, whose fixed-line business is listed separately, Sistema, Telenor and us.”