Reliance Jio, India’s leading telecom operator, has now become the top mobile network worldwide in terms of data usage, overtaking China Mobile. During the first quarter of the year, Jio’s network saw a massive 40.9 Exabytes of data traffic, edging out China Mobile’s 38 Exabytes, as reported by the international analytics company Tefficient.

5G Growth and Revenue Impact

Jio is also at the forefront of 5G technology, boasting the world’s second-largest 5G user base at 108 million. Impressively, over a quarter of Jio’s wireless data traffic is now 5G-based, according to the firm’s financial analysis.

However, Jio’s revenue per user, a key performance indicator, is influenced by the addition of budget-conscious JioBharat phone subscribers and the introduction of unlimited 5G plans.

Market analysts predict that Jio’s rapid customer growth and increased market share will positively affect its revenues soon, especially after expected price increases of 20-25% following the general elections in early June.0

Broadband Expansion and Revenue Challenges

Jio’s home broadband service, AirFiber, is also experiencing strong demand across nearly 6,000 towns, leading to a record number of new home connections. AirFiber users consume an average of 13 Gigabytes daily, which is 30% more than JioFiber users.

Despite these high usage figures, Jio’s average revenue per user has not seen significant growth due to the company’s yet-to-be monetized 5G services. The continued addition of JioBharat phone users and unlimited 5G plans are affecting the company’s revenue per user, which has remained unchanged for three consecutive quarters.

Brokerage firm JP Morgan highlights that Jio’s extensive 5G coverage has led to a swift transition to 5G services at promotional rates, reducing the need for 4G data top-ups and attracting cost-conscious consumers to cheaper data plans.

Currently, almost a third of Jio’s network services are effectively free due to these promotional 5G offerings.

By the end of the fiscal year 2024, Jio expanded its subscriber count from 449 million to 482 million, with an average data consumption of 28.7 GB per user each month. Yet, the company’s revenue per user has barely changed, staying at Rs 182 compared to Rs 181 at the year’s start.

In contrast, Bharti Airtel has seen a lower increase in data usage and subscriber numbers but has managed a steady rise in revenue. Its user base is estimated to have grown from 339 million to 350 million in FY24, with revenue per user increasing from Rs 200 to Rs 211. Analysts emphasize the need for higher tariffs across the industry to effectively profit from 5G services.

Emkay Research anticipates a tariff increase in FY25, as telecom operators are not achieving the necessary returns and will require higher tariffs to recoup their 5G investments. They also foresee another potential tariff hike in FY26.

Jio’s market share growth is expected to translate into revenue gains in the near future, particularly once tariff increases are implemented.

Bank of America Global Research notes that Jio’s superior 5G network, strategic partnerships with top smartphone brands, and the JioBharat phone are key factors driving the adoption of Jio’s services. These partnerships and Jio’s market leadership are expected to continue to grow.

Additionally, Jio’s targeted bundled services for small businesses in various sectors are contributing to its growth in the enterprise market.

Goldman Sachs estimates that Jio’s fiber-to-home and enterprise services account for 7% of its revenue from the previous quarter. Jio is currently the largest wired broadband provider in India, with a subscriber base 43% larger than Bharti Airtel’s.

You might also be interested in - Reliance Foundation unveils Vantara Rescue and Rehabilitation Centre in Jamnagar