country, the Kotak report states.
The quantum of increase in data
consumption in the country has also
gone hand-in-hand with a steep fall
in the cost of such data. According
to industry estimates, the average
cost of a GB of data post Jio’s launch
has fallen to `50, from a minimum
of `250 earlier. The result is that
Indians are hooked on to their
data-driven smartphones like never
before. “Jio has brought about a
seismic shift in India. As we look at
the data coming from our audience
of mCent (a web browser) users, we
are seeing Jio subscribers consume
upwards of five times more data than
other users on other operators,” says
Nathan Eagle, founder and CEO of
Jana, a Boston-based company that
sells data to global customers in
exchange for them consenting to viewads. “Much of this content comes
from the recent adoption of mobile
video and local language content.
Even the major television networks
in India are now making original
content for their OTT platforms.”
Sceptics had also argued that
Jio’s services would stay popular
as long as they remained free, and
that volumes would drop as soon
as the telco started charging for
its services. These concerns have
proven to be unfounded as well.
Jio launched its free services in
September 2016 and moved to a paid
regime in April this year. Despite that,
Jio reported a robust net subscriber
addition figure of over 15 million
as recently as in the September
quarter (up from 13 million in the
April quarter), with a market share
of around 10 percent. An IIFL
Institutional Equities research reportdated October 16 estimates around
75 percent of Jio’s overall subscriber
base has migrated to paid services.
Jio also said that it had realised
an average revenue per user
(ARPU) of `156.4 in the September
quarter, and the steady stream of
subscribers witnessed by the carrier
has encouraged it to even hike its
tariffs for some of its plans. A JM
Financial report dated October 23
estimated Jio’s ARPU to further
increase to `165 in FY20. Despite the
competitiveness with which Jio has
priced its products, its reported ARPU
in the second quarter of fiscal 2018
is similar to that of India’s largest
telco Bharti Airtel, which reported
an ARPU of `154 in the first quarter
of fiscal 2018 (its second quarter
earnings numbers weren’t public
at the time of writing this story).Even Jio’s reported revenue
and profitability numbers for the
September quarter (the first for
which it has disclosed these figures)
have pleasantly surprised the Street.
Jio reported a standalone revenue
from operations of `6,147 crore, a
standalone Ebitda (earnings before
interest, tax, depreciation and
amortisation) of `1,443 crore, with
an Ebitda margin of 23.5 percent.
Jio’s earnings statement stated that
a positive operating profit in the first
quarter of commercial operations
was the function of “tremendous
uptake by subscribers and cost
advantages generated through the
use of efficient 4G technology”.
“The strong financial results of
Jio demonstrates the robust business
model of Jio and the significant
efficiencies that the company has built
through its investments in the latest4G technology and right business
strategy,” Ambani said in the earnings
statement. “As always, the group has
demonstrated excellence in execution,
vision and commercial acumen.”
The IIFL report cited earlier
said that Jio’s performance in the
second quarter of fiscal 2018 was a
“beat” on expectations, leading the
brokerage to revise Jio’s estimated
enterprise value to $40 billion from
$26 billion earlier. “We also think
appearances matter, and regardless
of accounting conventions used,
Jio’s bright numbers have diluted
the predatory pricing arguments
incumbents have been using against
Jio,” analysts GV Giri and Balaji
Subramanian said in the IIFL report.
Tarun Pathak, associate director
with the Indian arm of Counterpoint
Technology Market Research, a
Hong Kong-based consultancy,
says that not charging customers
for their services from the word go
was a “masterstroke”. “They knew
that there would be bottlenecks
to begin with. They’ve waited to
see how their networks would
support all the services,” says
Pathak. “Gradually, they have
shifted consumers from free to pay
and have used the time to improve
the quality of services as well.”
But providing high-speed and
affordable connectivity is just
a part of Ambani’s larger game
plan. As Jayant Kolla, partner at
Convergence Catalyst, a Bengaluru-
based telecom and internet
consultancy firm, says: “Jio won’t
be happy with just providing the
pipe. I believe their bigger objective
and vision is to become a digital
services and internet company.”
Indeed, Jio has been investing
heavily and stitching partnerships for
various data-led, value-added services
across categories like content and
entertainment, financial services and
health care. Kolla says Jio has the
opportunity to build, what he calls,
a “Jio Internet” for India, in a bid to
hold on to the consumers’ attention as48 | forbes india december 29, 2017t he average cost of a gB of
data has now fallen to `50 from
a minimum of `250 earlier
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