Vodafone is most vulnerable to losing data customers to Reliance Jio: Analysts

With Reliance Jio Infocomm giving free 4G data till December 31st, other telecos have been facing a lot of competition. In the rising competition, analysts and industry officials feel that Vodafone India is most vulnerable to losing data customers because it doesn't have the widespread 4G network needed to withstand competition from Reliance Jio Infocomm.

Vodafone "is the most exposed" among the telcos against Jio's disruptive pricing, which is reflected in the company's loss of 1 lakh data customers in the September quarter, they said.

Airtel Bharti and Idea Cellular gained 3.7 million and 5 million data customers, respectively, during the period.

Industry officials feel that a major impact of Jio’s entry will be felt in the third and fourth quarters of 2016-17.

"Vodafone doesn't appear to have taken Jio's entry too seriously and is clearly lagging behind, in that it is still far from rolling out a comparable pan-India 4G network and could end up paying a high price in the third and fourth quarters when the real impact of Jio's launch is likely to intensify," a senior executive of a top incumbent telco told ET.

Brokerage Edelweiss Securities backed the view, saying, "Vodafone is more reluctant to invest in network capacity building as it focuses on selective circles, which may make it more prone to lose market share to Jio than any other operator."

However Vodafone call the comments rubbish. "When one of the players decides to give everything for free, there's bound to be some impact on the rest, but the fact is, Vodafone gained 1 million heavy data users with monthly usage levels above 1MB during the September quarter, and is strongly poised for the future on the 4G front," a company spokesman told ET.

However, analysts at Motilal Oswal said Jio's subscriber growth rate has plunged below 50%, stung by handset challenges and a drop in footfalls at retail outlets after high-denomination notes were banned. The brokerage sees a strong possibility of Jio extending its free services offer beyond December if it is unable to acquire 100 million customers by the year-end.