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Acquisition of Bharti Airtel Telecom by Reliance Jio

News & Blog

Acquisition of Bharti Airtel Telecom by Reliance Jio
Acquisition of Bharti Airtel Telecom by Reliance Jio

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Acquisition of Bharti Airtel Telecom by Reliance Jio

Background

The merger of telecom giant Vodafone and Idea Cellular Bharti has made them the primary telecom service providing the company with a subscriber base. Bharti Airtel has been the megastar in the telecom sector in India ever since it was launched. But of late the TRAI has officially announced the acquisition of Bharti Airtel telecom spot by Reliance Jio. For the first time in 14 years, Bharti Airtel Telecom posted a quarterly loss of Rs 2866 Cr in the quarter ended on 30th June 2019. The reason for the same is the unleashed growth of the rival telecom Reliance Jio Infocom Limited. The introduction of Reliance Jio Infocom in the telecom sector reshaped the existing shape of the market. Reliance Jio Infocom is owned by the chairperson of Reliance Industries Limited Mr. Mukesh Ambani. The prices offered by them to the subscribers were competent enough to take a major chunk of Airtel subscriber base.

With the current war in tariff, Bharti Airtel Telecom has been unable to raise prices or to retain the subscriber base that it initially ruled on. Reliance Jio Infocom has gained a massive user base of approximately 306 million as compared to Airtel which is struggling hard with around 284 million subscribers. Reaching the 300 million mark in terms of subscribers in the short tenure in the telecom market by Reliance Jio, which was launched in 2016, is one of a record as Airtel was able to achieve this number only in the 19th year of operation. Reliance Jio with the super competitive services, cheap bundles, internet speed, and attractive offers has been able to acquire much of Airtel’s subscriber base.

As per the reports from TRAI i.e. Telecom Regulatory Authority of India, the prices offered from Reliance Jio Infocom became the reason for closure for smaller players in the sector like Aircel, Reliance Communication Ltd and also made way to the merger of telecom giant Vodafone with Idea Cellular and Bharti Airtel with Telenor and Tata Teleservices. Yet nobody has been able to compete with the gigantic performance of Reliance Jio and now a new leader in the telecom sector has emerged after 14 years of monopoly.

Jio focuses more on volume and thus gives cut-throat tariff offers as compared to Bharti Airtel. This strategy has given a big boost in the subscriber base and a push in the net profit by 64.7% in the March quarter. Predictions have been said about Jio acquiring approximately 40% of the total market share of the telecom industry with the pace which it is growing. As per TRAI data, the highest AGR i.e. the Adjusted Gross Revenue amongst all telecom companies has been achieved by Reliance Jio which is of Rs 9482 Cr.

Making the fight even tougher for Bharti Airtel Reliance Industries has plans to acquire, and add to its pre-existing fiber assets to, Reliance Communication’s fiber assets. This will make Reliance Jio a much larger network as that compared to Bharti Airtel which has its total fiber spread over 250000 km across India and abroad. The total fiber assets of Reliance Jio Infocom is expected to be somewhere around 4, 28,000km just within India which is way more than that of Bharti Airtel.

With the Acquisition of assets of RComm, Reliance Jio Infocom has become the second-largest tower owners in the country. The coverage it will be able to provide under this condition shall be another hit on the losing subscriber base of Bharti Airtel and revival for the same shall be even more difficult. Reliance Jio Infocom aims of acquiring an additional 100 million customer base in the next financial year which shall make it the biggest player in the telecom sector in India ever.

 Frequently Asked Questions (FAQs)

How has Reliance Jio Infocom been able to defeat Bharti Airtel in the telecom sector?

The comparative chart between Reliance Jio Infocom and Bharti Airtel are

Reliance Jio Infocom Bharti Airtel
  • Towers under possession  over 143000
  • Fibre assets 428000 km
  • Subscriber base of approximately 306 million
  •  AGR 9482 Cr
  • Towers under possession approximately 90000
  • Fibre assets 178000 Km
  • Subscriber base of approximately 284 million
  •  AGR much lower as compared to Reliance Jio Infocom

What benefits did Reliance Jio Infocom reap from the deal with RComm?

The fight of Reliance Jio Infocom has intensified with its competitor Bharti Airtel after the RComm deal between the Ambani brothers

  1. Reliance Jio now has acquired the tower assets of RComm and it has a total 143000 towers in its kitty
  2. Reliance Jio Infocom has acquired the Fiber Assets of RComm and it has a total of 428000km of fiber within India itself.
  3. Reliance Jio after the deal is also eyeing to provide FTTH with broadband and TV services giving a harder hit to Bharti Airtel

Did Reliance Jio Infocom buy Bharti Airtel telecom?

The New telecom gin Reliance Jio Infocom has overtaken Bharti Airtel concerning subscriber base but has not bought any of its stakes. The Bharti Airtel Telecom is headed by Sunil Bharti Mittal

When was Reliance Jio Infocom launched?

Reliance Jio was launched in September 2016.

What is the current market share of Reliance Jio in the telecom sector?

The market share for Reliance Jio Infocom analyzed by Jefferies India Pvt. Ltd in the current quarter is 29.2%. Reliance Jio is expected to become the leader in the telecom sector by the last quarter of FY19 if the current growth pace continues.

What has been the key factor for the attacking entry of Jio in the telecom market?

Reliance Jio Infocom Came with a focus on the volume of subscribers in the telecom market. They provided cut-throat tariffs, extensive coverage, and good internet speed. This made it the 2nd largest player in the telecom market concerning subscriber base within 2 and a half years after launch.

What are the TRAI reports for Reliance Jio Infocom for the year 2019?

TRAI has officially announced the acquisition of Bharti Airtel telecom spot by Reliance Jio in the first quarter of FY19. The company has made a net profit of 64.7% in the March quarter. As per TRAI data, the highest AGR i.e. the Adjusted Gross Revenue amongst all telecom companies has been achieved by Reliance Jio which is of Rs 9482 Cr.

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