Reliance Jio Infocomm (Reliance Jio), the telecom arm of Reliance Industries Limited (RIL) won't hit its rivals Idea Cellular, Bharti Airtel, Vodafone and others from a revenue viewpoint but its role as a "disruptor" is here to stay, according to Fitch Ratings. Reliance Jio's market share will be negligible next year, it added.
"The top-four's - Bharti Airtel, Vodafone India, Idea Cellular and Rcom/Aircel — revenue market share will rise to around 84 percent (2016: 79 percent) as they gain market share from smaller telcos; we expect Reliance Jio to gain less than a 2 percent revenue market share in 2017 but to act as a major price-disruptor to the sector," the ratings agency said in a note on Friday.
The analysis comes even as analysts have expressed concerns over the impact of Reliance Jio's foray on the revenues of Idea, Vodafone and Bharti Airtel, given the RIL subsidiary's aggressive plans to woo customers. Bharti Airtel has already come up with a counter-move to retain customers.
Reliance Jio will be investing a huge sum to upgrade its infrastructure over a period of four years, according to its joint CFO. "The investments of additional one lakh crore will be made by 2020 in expanding our network. So, a total of Rs. 2.5 lakh crore investments is committed for digital India by our chairman. A part of the investments will be made in rolling out optic fibre to homes," V Srikanth said.
During the recently-concluded auction for telecom spectrum, Reliance Jio bid for three bands for a total outgo of Rs 13,672 crore.
Reliance Jio had 16 million subscribers as of September 30, 2016
On Thursday, RIL declared its September quarter results, posting net fall of 22.9 percent in consolidated net profit to Rs 7,206 crore, year-on-year, while the adjusted net profit rose 43 percent.
Sales rose 9.6 percent to Rs 81,651 crore in Q2 from Rs 74,490 crore, YoY while debt rose to Rs 1,89,132 crore as of September 30, 2016 from Rs 1,80,388 crore six months ago.
RIL shares closed 2.21 percent down at Rs 1,064.40 on Friday on the BSE.