Within one month of launching scheme for converting free subscribers to paid customers, Reliance Jio announced that it had achieved 72 million paid customers.
We have no reason to believe that the figures provided by the company are not correct. As I wrote earlier, only three organisations have capabilities to verify the numbers – Reliance Jio, Telecom Regulatory Authority of India (TRAI), and Department of Telecommunications (DoT).
However, there are few observations on Jio’s claim of 72 million subscribers:
1. Reliance Jio’s VLR is 70%. It had 100 million subscribers at March beginning. With 72 million paid subscribers all active subscribers must have converted. Theoretically, it is possible but in practice it is very difficult.
2. If we assume that a large number of new customers joined in March. Even then, it is a difficult task to achieve.
3. If the response for paid services is so good, why did the company offer free services for three more months? It could have simply extended the date of registration.
For benefit of our readers, I am reproducing a part of an article that appeared in TelecomTiger on Friday:
As Reliance Jio’s free services end today, the telecom industry is speculating on the number of paid subscribers that the company would be able to enrol. There are media reports and surveys indicating a conversion rate of anywhere between 13% and 98% of the total subscriber base.
New vs Incumbent, historical data
Historically, active subscriber base of a new operator has always been much lower than its registered customers.
Telecom regulatory Authority of India (TRAI) published visitor location register (VLR) of the operators for the first time in December, 2010. VLR is an indicator of active subscriber base of an operator. It is basically a temporary database of subscribers who have roamed during the period in that particular area.
The figures revealed that the active user base of all new operators that were issued licence during 2008 was below 50%. It was 25% for S Tel; 31% for Uninor; 39% for Videocon and 46% for Sistema Shyam. Even Tata Teleservices, which was a new operator in GSM, had a VLR of 46%.
The incumbent operators Bharti Airtel, Idea Cellular and Vodafone Essar had a VLR of 90%, 88% and 75% respectively.
Reasons for low active subscriber base
Reasons given for low active subscriber base were - subscribers joined new operators for freebees and low tariffs, multiple SIM situation and operators’ focus on acquiring customers at any cost.
What to expect from Reliance Jio
There are many reasons why the market situation in 2017 is much different than that in 2010. However, there are equally strong reasons to believe that it could follow the same pattern. So, without going into these arguments let me analyse some of the existing reports and surveys.
Survey predicting a conversion of between 30-50%: On March 15, TelecomTiger did a survey of about 20 shops and Jio Centres in Delhi. Employees at the Jio Centres told us they were hopeful that about 50-60% of the total subscribers would register for prime membership. The shops not owned by Reliance Jio said that only about 30-40% would retain their services.
Survey predicting a conversion of up to 98%: As per a survey by Bernstein, a wall-street research and brokerage firm, 98% of existing subscribers would pay for Jio services. I fail to understand when RIL Jio’s VLR is only 70%, how can 98% subscribers convert to paid customers? However, it seems that Bernstein has surveyed only active customers. Hence, there is no reason not to believe Bernstein survey.
Media reports saying 13% conversion rate: I will not be surprised if this information is correct. A good journalist always relies on information provided by a trusted source. Generally, such sources are company officials that are privy to the information. If that is the case, this may turn out to be the most authentic information.
What is the real paid subscriber-base of Jio?
Reliance Jio will soon announce its paid subscriber base. It is very difficult to verify whether the initial numbers provided by a company are correct or not. Only three organisations have capability to verify whether these figures are correct – The Company, TRAI and DoT.
In such a situation we have no option but to rely on the information provided by The Company.
In any case, the long term success of Reliance Jio will depend on the Quality of Services provided to customers.