“Data, data, data…I cannot make bricks without clay…”

Those were the words of the immortal Sherlock Holmes (The Adventure of the Copper Beeches. And it certainly holds true when it comes to talking about the telecom industry. We can speculate endlessly but for real – and credible – analysis one needs information. Which is why we were delighted when the Telecom Regulatory Authority of India (TRAI) released its subscription data for until 28 February 2017.

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Image: The Quint

Using the data, it is now possible to gain some insights on the progress Jio has made till date. Jio’s commercial launch took place on 5 September 2016 and TRAI has made subscription data until 28th February 2017 available, giving us almost 6 months of data to draw upon. TRAI’s data also raises new questions regarding Jio’s Prime membership statistics. Here is what I have been able to glean from the figures:

The case of the two missing metros in the top ten circles

Right off the bat, Jio’s largest circles both revenue and subscriber wise are becoming clear. Although changes are possible down the road, the circles that get a head start in the beginning end up being the largest for the foreseeable future. Vodafone was No.1 in Mumbai a decade back and still is. Airtel was No.1 in Delhi a decade back and still is.

Jio’s largest circles, subscriber-wise, are:

  • Andhra Pradesh – 8.9 million
  • Gujarat – 7.6 million
  • Tamil Nadu – 7.5 million
  • Delhi – 7.4 million
  • Maharashtra – 7.1 million
  • Karnataka – 6.57 million
  • U.P East – 6.56 million
  • Madhya Pradesh – 5.7 million
  • Bihar – 5.59 million
  • U.P West – 5.50 million

There is hardly anything surprising in this except for the fact that Mumbai and Kolkata did not make it to the list. Considering that both Mumbai and Kolkata are metro circles, they should have been amongst the top 10 circles as people in these cities are generally tech savvy and penetration of 4G devices is higher as well.

Going forward, these are the circles Jio is most likely to concentrate upon. Just like any other business, telecom operators focus on return on investment (ROI) as well. India as a country is simply too big to be treated as one. Several states in India are as big as or even bigger than certain European countries. In order to maximize return on investments, as margins are pretty low, telecom operators spend most of their capital expenditure (CAPEX) on a select few circles.

Although Jio has completed its macro build out on a pan-India basis, further efforts to improve the network such as the deployment of small cells, optimization of cell towers, carrier aggregation, the addition of new towers, spectrum purchases, etc., will largely be determined based upon the circle’s ability to generate revenue. Even though Mumbai and Kolkata have not made it to Jio’s top 10, I still expect Jio to make significant investments in these circles as on a subscriber/km^2 basis, they are still in a better position than a lot of Category B and Category C circles.

The case of constantly declining active subscribers

One way to determine the number of active subscribers on a network is to have a look at the VLR data. VLR data is the percentage of the total registered subscribers of an operator that have used their SIM card to make/receive a call, text or use any byte of data. VLR data is a great way to determine the quality of a telecom operator’s subscriber base. If a particular telecom operator has its VLR percentage greater than 95 percent then that represents a very active subscriber base. For some telecom operators like Idea, the VLR percentage even exceeds 100 percent because of subscribers of other operators roaming on Idea’s network. For example, let’s assume that for a circle like Kerala, Idea has 100 subscribers out of which 98 have actively used Idea’s network and 3 subscribers from Aircel have also used Idea’s network. This means that a total of 101 (98 of Idea +3 of Aircel) have used Idea’s network even though total registered users of Idea is just 100. This results in a VLR percentage of 101 percent.

TRAI has released VLR data for Jio until February 2017:

  • October 2016 – 93.70%
  • November 2016 – 84.4%
  • December 2016 – 79.68%
  • January 2017 – 75.42%
  • February 2017 – 73.56%

As can be seen from the data above, Jio’s active subscriber base has been on a steady decline ever since its launch. This further affirms the fact that a significant number of users have been using Jio as a secondary SIM ever since the telecom operator’s launch. It is highly likely that when their primary operator itself started offering 1 GB/day and unlimited call plans, a number of people who were using Jio as their secondary SIM stopped using it altogether which explains the gradual drop in VLR/active subscriber base percentage.

The case of insanely high Prime subscriber numbers

Jio reported that as of 31 March 2017 it had 108.9 million subscribers. On 1 April 2017, it reported that it had 72 million Prime subscribers. So the 72 million prime subscribers that Jio reported on 1 April had to come from the 108.9 million subscribers that it had until 31 March 2017.

However, raw subscriber numbers are not truly indicative of a telecom operator’s subscriber base. What matters just as much is the VLR data which helps us know the number of customers that are active on the telecom operator’s network. Jio’s VLR percentage decline is as follows:

  • November 2016 -> (-)9.3
  • December 2016 -> (-)4.72
  • January 2017 -> (-)4.26
  • February 2017 ->(-)1.86

The fall in VLR percentage has slowed over the months but that is to be expected as Jio’s subscriber base has been growing at a meteoric pace. If there is a fall of 10 percent in VLR percentage when Jio’s subscriber base was 20 million then that means 2 million of the subscriber base was inactive compared to the previous month. Similarly, if there is a fall of 2 percent in VLR data when Jio’s subscriber base was 100 million, it still means 2 million of the subscriber base was inactive compared to the previous month.

Assuming the current rate at which VLR data is declining, it wouldn’t be a stretch to assume that Jio’s VLR data declines around 1.5 percent by March 2017. Since the VLR percentage for February 2017 was 73.56 percent, a decline of 1.5 percent would result in a VLR percentage of around 72 percent for March 2017.

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Applying this 72 percent to the subscriber base of 108.9 million at the end of 31 March 2017 gives us an active subscriber base of 78.40 million subscribers. Considering that Jio has claimed that 72 million subscribers have signed up for Prime, it indicates theoretically that 91.8 per cent of Jio’s active subscriber base has signed up for Prime. Now I am not sure how Jio has managed to achieve such a feat but 91.8 percent is absolutely staggering, almost to the point of being unbelievable. If someone from Jio is reading this and has an explanation for the numbers, please do comment.

The case of dropping competitor revenues:

Yet another way to measure Jio’s impact would be to compare the drop in revenue of competing telecom operators. I am going to be using data derived from TRAI’s website in order to calculate the drop in revenue of telecom operators competing with Jio. The revenue comparison is between the quarter ending September and the quarter ending December 2016.

Before I start, please note that the comparisons here are strictly restricted to the revenue generated from mobile/UASL services alone. It in no way includes revenue derived from the tower operations of the company or its DTH business or any other revenue generating source that does not fall under the gambit of License Fee/Spectrum Charge.

Airtel –

Quarter ended September 2016 – Rs 16,211.38 crores
Quarter ended December 2016 – Rs 15,424.33 crores
Drop in revenue – 4.85%

Telenor –

Quarter ended September 2016 – Rs 1,266.24 crores
Quarter ended December 2016 – Rs 1,173.44 crores
Drop in revenue – 7.90%

Reliance Communications –

Quarter ended September 2016 – Rs 2,063.41 crores
Quarter ended December 2016 – Rs 1,885.25 crores
Drop in revenue – 8.63%

Idea –

Quarter ended September 2016 – Rs 9,230.98 crores
Quarter ended December 2016 – Rs 8,724.28 crores
Drop in revenue – 5.48%

Vodafone –

Quarter ended September 2016 – Rs 11,240.97 crores
Quarter ended December 2016 – Rs 10,680.84 crores
Drop in revenue – 4.98%

Tata –

Quarter ended September 2016 – Rs 2,501.6 crores
Quarter ended December 2016 – Rs 2,211.98 crores
Drop in revenue – 11.57%

The ranking of telecom operators worst affected by Jio in terms of revenue is:

  1. Tata
  2. Reliance
  3. Telenor
  4. Idea
  5. Vodafone
  6. Airtel

As can be seen, almost every telecom operator has witnessed a drop in their revenue. I have done the analysis for all the telecom operators except BSNL, MTNL and Videocon as it is practically infeasible for me to calculate the same for these operators. As a result, I have worked out the figures for seven of them to give a brief overview. Also to be noted here is that COAI which used to publish consolidated financial statements has stopped doing so since Q2 2016, i.e., ever since Jio’s launch quarter making life for writers like me all the more difficult. So much for transparency.

I tried to compute the revenue of Aircel as well but since the telecom operator has decided to add proceeds from its 2300 MHz airwaves sale to Airtel in its quarterly statements, it became difficult to paint an accurate picture.

More conclusions with more data

This is just the tip of the iceberg. Once TRAI releases financial data for the quarter ending 31 March 2017 and subscription data for March and April respectively, we will be able to glean many more insights. But one thing is for sure: Jio’s impact on the industry is substantial.

Give us more data, then, TRAI. We need to make some more analytical bricks.

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