Reliance Jio Trial User Data usage Pattern - Clear Indication of Indian Mobile User Mindset & Business Threat

I was reading an interesting article about the data usage across different service providers including Reliance Jio. According the published report in Business standard , Most of the incumbents Mobile service provider based user at an average consume less than 1 GB data ( approximately 0.8 GB) per month whereas recently launched Reliance Jio trial userbase of 7 million showed exceptionally good result on data download Reliance Jio trial user base is consuming around 19.2 GB per month. Isn't it mind blowing and why the incumbent Mobile Service providers failed to find such a data hungry userbase. Indian Mobile Service Provider at an average generates Data ARPU of around $1.65 and if they will get the trial userbase of Reliance Jio then their data APRU will be one of the highest across all geographies.

In point of view, Reliance Jio userbase usage pattern is just an illusion and nothing else. It clearly indicate that Indian Mobile user always prefer to hop for the free services. It would be interesting to see what will be per user data consumption when it comes to Reliance Jio once they launch full commercial services.

I would like to remind RelianceJio that India implemented Mobile Number Portability ( MNP) and more than 23% of the VLR active userbase already hopped from one Mobile Service Provider to another one. When Mobile Number Portability ( MNP) came to force then Indian Incumbent faced very high churn rate as mobile user misused the clause of MNP. In order to acquire new user, the new Mobile Service provider's offered number of freebies and mobile user opted for it and once they consumed the free talk time to data, they moved to another network and hence they effectively possessed free mobile connections.

I am confident that Reliance Jio is going to get around 15 to 20 million userbase within first full commercialized financial year but will have very high churn rate. As per the rumor in the market that Reliance Jio will position its service with veryaggressive subscription price point but at the same time they should be ready to deal with the MNP issue which they cannot avoid.

The Incumbent like Airtel, Idea and Vodafone will play around in the same strategic and tactical way to let Reliance capture market share and let go their low ARPU generating user which in turn will hurt Reliance Jio more as Reliance Jio will be offering service in subsidized manner.

At the same time Reliance Jio should be ready for bad debt when it comes to recovery of monthly bill, the way many new entrant of 2011-2013 faced.

Reliance may analyze the trial data as optimistic result but in my point of view, its a warning bell for them and they should do the position of the product strategically so that they don't hurt themselves more than their competitors

Who Is Responsible For Reliance Communication Current Situation

Just like a fairy tale story once upon a time…. in 2004 -2005 era Reliance communication was the darling of every user in India. Wow, then what happened; Reliance communications business came to younger son of Respectable DB Ambani and he changed the track of the company direction. Reliance was instrumental in bringing devices to common hand and thought that once user will get habitual like alcohol then start charging end user. As a smart user, once user stopped getting the free talk time they moved to other service provider without closing the existing connection. That led to detoriation of HLR vs. VLR active user % and also impacted the ARPU.

It is really interesting to observe that Reliance communications selected CDMA just opposite of majority of other player and in turn lack of fashionable devices and it also helped competitor to snatch the remaining user base. The growth rate of Reliance Communication landed at the lower end as they invested in domain like undersea cable to data center where the business is capex intensive but global downturn as well as offering of better value proposition based cloud based solution blocked Reliance Communications path to prosperity.

In most recent quarterly report, the user Base came down to 102 mn andARPU is one of the lowest among peers. They claim to have 34 million plus data user Base and generating one of the lowest again.

In order to reestablish itself, they merged with MTS brand ownerwhere Reliance communications will still hold 90%, on the other side they are talking with Aircel another Indian service provider reeling under huge debt plus failed to attract high ARPU userbase.

I am following Reliance communications for the last 3.5 yearand every year they come up with one or another punch line that they are going to sell their tower business and they are in discussions  including exclusive discussion  but unfortunately the tiered investor all the time keep on waiting.

Six months back they announced that they are on the verge and equity price got the bump upwards and now they are saying that it will be done post Aircel deal. How they can claim that it will be done post Aircel deal when Aircel deal discussion just got extended.

In my point of view, that equity investor will not buy the point that what is your EBITA and concern regarding serving of debt but they actually want them to see tower and other non profitable business to reduce the interest cost and in turn increase the earning per share.

The current state of Reliance Communications foundation happened on the day they started giving subsidized device with Reliance communications connection.

Now they are doing another mistake of forcing more than 6 mn to port to their new network otherwise they are disconnecting the service. I am sure it is not going to help them as well as take them anywhere.

It's a strategy of Reliance communications to stream line the business and then get acquired or merged with Reliance Jio. We should not forget that how Reliance Jio entered into it indirectly.