Top telcos would focus on increasing their subscriber market share during FY 19: India Ratings

The competitive intensity will extend from the broadband segment (3G/4G) to feature phone segment (2G) with R-Jio’s aggressive marketing plan.

By Priyanka
|

Research firm India Ratings has revised the outlook on telecommunications services sector from negative in FY18 to stable in next financial year.

 
Top telcos would focus on increasing their subscriber market share

The firm said that top telcos would focus on increasing their subscriber market share rather than revenue share during FY19, and the dual sim phenomenon would continue for longer-than-expected, given low customer loyalty and high price sensitivity. The tariff-based customer acquisition will spread to the lower ARPU segment using feature phones.

 

The ARPUs will be capped at the higher end but remain at risk at the lower-end post-R-Jio's feature phones. While the industry pricing trend will continue to move towards competitive pricing on medium validity plans (70-90 days) to retain the market
share, a competitive play could from pricing shift to pure-play services such as handset bundling, device protection, and buyback. The return of pricing power is uncertain and would be dependent upon complex factors such as RJio's pricing strategy and consumer reaction to tariff increases. Return of pricing power, although crucial, appears difficult in FY19.

Ind-Ra also expects RJio to gain a higher share from the exit of small telcos and also from first-time data users. RJio is likely to maintain subscriber acquisition momentum by continuing with discounted pricing policy or bundling more services. Ind-Ra
believes the competitive intensity will extend from the broadband segment (3G/4G) to feature phone segment (2G) with R-Jio's aggressive marketing plan.

This may lead to shifting of 2G subscribers directly to the 4G platform, thus making 3G offerings from existing telcos irrelevant
for Indian markets. This will keep competitive intensity high in FY19, despite the reduction in the number of players. Ind-Ra projects an increase in revenue market share (RMS) for RJio with a possibility of lower RMS for Vodafone-Idea (merged)

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