The tough competition between Bharti Airtel and Reliance Jio Infocomm in the 4G network space is watched by telecom CEOs across the world.

At present, Reliance Jio, the latest telecom network operator in India, is struggling too much in the Indian 4G market as it cannot meet the consumer demand due to lack of planning in networks and less balanced distribution of SIM cards.

During October, while Bharti Airtel has improved 4G speeds and expanded its 4G service to 19 of the total 22 markets, Reliance Jio saw a fall in data speeds across 17 markets to average 6 Mbps, which is comparable to the speeds of Idea Cellular and Vodafone India and nearly that half of Bharti Airtel.

4G speeds are still 2-3x of 3G which could continue to drive migration to 4G services. If Reliance Jio’s 4G speeds do not improve, the new entrant may extend “free offers” beyond December adding risks to the data pricing of incumbents, said CLSA.

CLSA said its second edition of Quality of Service Tracker analyzed TRAI’s speed test data based on nearly 2.5 million and 0.5 million samples on 4G and 3G networks, respectively.

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CLSA said it’s positively surprised by the network outperformance of Bharti Airtel and maintain that it remains a key driver of market share gains.

4G network speeds at 2-3x of 3G service

In this second edition, Quality of Service Tracker from CLSA looks at TRAI’s speed test data based on ~2.5m samples on 4G and ~0.5m samples on 3G networks.

Among the four large operators, while Bharti Airtel and Idea Cellular have improved/maintained 4G speeds, Vodafone and Reliance Jio have seen a fall.

Average 4G network speeds are still 2-3x of 3G speeds which could continue to drive migration from 3G to 4G services.

Airtel in 4G

Bharti Airtel, which had started making investment of Rs 60,000 in the third quarter of last year, is focusing more on mobile Internet business. Airtel made spectrum deals with Videocon and Aircel to gain in the 4G space.

While Airtel is yet to disclose its 4G subscriber base, the largest telecom operator is making inroads into India’s small towns with its mobile Internet venture. The growth of 4G smartphones is making a positive impact on the fortunes of Bharti Airtel as well.
Bharti and Idea maintain network speeds

TRAI data show that during October, Bharti Airtel and Idea Cellular maintained 3G and 4G speeds despite increasing 3G and 4G adoption.

Last month, Bharti Airtel saw an increase in speeds in 10 of its 16 4G markets and also expanded its 4G service to cover 19 of the total 22 markets.

Idea Cellular also reported an increase in 4G speeds in six of its 10 4G markets and expanded its services to cover 11 markets during the month.

Aggressive network rollouts by both these operators has helped to maintain service levels despite an increase in the 3G/4G subscriber base.

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Jio 4G speeds nearly half that of Bharti

In contrast to Bharti Airtel and Idea Cellular, Reliance Jio saw a ~20 percent fall in speeds from 7.2Mbps in September to 6Mbps.

With 17 of the 22 markets reporting the fall, a quick subscriber ramp-up led by “free offers” (high usage) impacted service quality in most markets.

The fall in speeds is higher in data-heavy markets such as Delhi and Mumbai, likely due to higher penetration/usage of 4G services in these markets.

At 6Mbps, Reliance Jio’s speeds were similar to the average speeds of Idea Cellular and Vodafone at 7Mbps but nearly half of Bharti Airtel’s 11.5Mbps speed.

Potential risk to data pricing; key is network outperformance

Since Reliance Jio’s launch, in a bid to defend market share, incumbents have launched several promotional offers and this has impacted their data realisations.

In case Reliance Jio’s 4G speeds remain similar to the competition, Reliance Jio could extend its promotions beyond December to gain market share, which in turn could pose further risks to the data pricing of incumbents.

During 2HFY17, CLSA forecast 30 percent and 25 percent declines in the data realization of Bharti and Idea, respectively, vs the 20 percent decline in 1HFY17.

The report said 1 percent further fall in data realisations without any corresponding increase in usage could impact EBITDA by 0.4-0.8 percent for Bharti Airtel and Idea Cellular, respectively.

Jio takes data market to next level

In-spite of Reliance Jio facing the critics heat, as it struggles to prove true to its word, Jio and Airtel connections have witnessed highest amount of improvement with the provisioning of additional interconnect points by the latter, reveal ET reports.

In less than two months since its commercial launch, Jio is already handling more data traffic on its network than any other telecom operator in the world.

Jio, which made $20 billion investment, may pick up its performance once the amount of users additions come down or once the services are charged.

Jio is handling data over 16,000TB per day, as per Credit Suisse reports.

Also, the carrier claimed that it was adding between 600,000 to 1.1 million subscribers to its network each day.

As per the latest company reports, over 24 million users are currently using Jio 4G SIMs across the country. Jio says its growth was hampered in the initial phase of the launch due to interconnection issues. Several Jio 4G SIM users are happy in towns, while rural folks are struggling to find network speed.

The launch of Jio also raised questions on the pre-existing telecom market in India. If top telecom operators can now manage to slash down the rates and offer better services, why did they not do it before?

Baburajan K and Vina Krishnan
[email protected]