Investors in Airtel had bet that Vodafone and Idea may not survive for too long, and that the pressure of competitive stategies from Reliance Jio is now in the past. Both bets seem to have come undone and shares of Airtel, India’s second largest telecom service provider, have lost 25% of their value.
Now, the market value of Reliance Jio, at 4.9 lakh crore, is nearly twice the size of Airtel, whose market capitalisation is down to 2.4 lakh crore.
Reliance Jio, owned by Asia’s richest man Mukesh Ambani, is aspiring for a lot more than Airtel, which seems to be focused on mobile services and broadband for now. After capturing up a big chunk of the mass market, mostly low-margin prepaid users, Jio is now targeting the high-spending post-paid consumers with new plans bundled with a free subscription to OTT platforms like Netflix, Amazon Prime Video, and Disney+ Hotstar.
Vodafone Idea has rebranded itself into Vi, and may find investors in US tech giants Amazon and Verizon. This could give the Birla Group company the cash it needs to survive for the next two years. Those backing Airtel had hoped that Vi will fall and the market will be down. Bharti Chairman Sunil Mittal had recently said that a fair price for mobile data in India would be a Rs100 per gigabyte (GB), whereas the current price of Rs10 per GB, is a ‘tragedy’.