Reliance Jio Infocomm impact: Airtel, Idea Cellular, Vodafone scramble for solutions

Ahead of the much-awaited launch of Reliance Jio Infocomm’s 4G services, the country’s top three operators – Bharti Airtel, Vodafone India, and Idea Cellular – are ramping up their content strategy to offer music to movie services on high-speed internet networks.

A comparison of apps of the four operators shows that Reliance Jio and Idea Cellular lead the pack with almost six apps each, while Bharti Airtel and Vodafone India lag behind with three each, according to data compiled by CLSA, a brokerage firm. Still, Reliance Jio has a comprehensive content offering giving it an edge among its peers, it says.

For example, Bharti already has music, movie services through its Wynk app, and has added games as a genre with the same brand name, while Vodafone India offers live TV, Video-on-demand and Music through its Vodafone Play app, its latest addition. On the other hand, Idea Cellular had announced its foray into six of the seven genres of the most-popularly used content by consumers. Over and above the existing content services, Bharti had indicated of a possible partnership with a US-based content company, while Idea Cellular had recently enabled payments for Google Play services.

“Idea has been working continuously to introduce its own apps and has signed partnerships with various service providers in this regard. The technologies are getting integrated and the rollouts can be expected in FY17. The company will continue its journey and will keep building various such interesting propositions in the digital space,” Idea Cellular said in a statement.

As for Vodafone India, the country’s second-biggest operator, the company has set up team to scout for content partnerships for its customers, and also create content “aimed at specific segments in the market, such that it will unlock usage of the internet” CLSA said in its note, citing Sundeep Kataria, director for commercials at Vodafone India.

To be right, analysts at CLSA do not think that content could be a game changer in the industry since the operators cannot differentiate themselves based on content, rather they are now focussing in improving their network quality. “Given the inability of operators to differentiate themselves largely on content, the focus is rising to differentiate on the service/ network experience,” analysts at CLSA wrote in a recent note to investors. The case in point, the analysts say, is Bharti’s target to add 1,00,000 sites in FY17-FY18 through its Project Leap while Idea Cellular’s move to increase its 3G/4G sites by about 55% in FY17.

The development comes as Reliance Jio is scheduled to roll out commercial services on 4G networks by offering content from magazines to messaging and live television on high-speed internet. A majority of the content is internally created by Reliance Jio’s team of app developers, or sourced from the Network18 Group, which owns and runs media properties.

The move comes as consumers are increasingly using their smartphones to listen to music, watch movies and read news, both in rural and urban part of the country. For instance, of the 209 million monthly active internet users in urban India at end of October 2015, 59% used their internet subscription for entertainment, while it was 44% of users in rural part where there were 108 million active internet users, according to a report by IMRB and Internet and Mobile Association of India.

Still, the move would help the operators to offer a compelling reason for their consumers to use high-margin internet on their smartphones, since prices for traditional voice telephone calls are already very low and the competition is high. Analysts at CLSA agree with their prediction that data revenue would more than double between FY16 to FY18 to $11 billion and drive a 9% compounded annual growth rate in industry revenue to $34 billion.