Seven months since the launch of Reliance Jio and the incumbent operators have shed subscribers and profit alike.

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“The price war for data subscribers has dented the bottom lines of wireless telecom service providers, yet none of them is likely to pull a punch,” CRISIL analysts Ajay Srinivasan and Hetal Gandhi said in a report dated April 24.

RJio’s entrance has also accelerated the need for 4G and consolidation in the sector when only a few years ago there were 10 players in the market which will soon consolidate to just five major players.

“The predicament is interesting given that till late 2015, telcos were not very gung-ho on launching 4G data services. Since then, however, they have aggressively invested in backhaul infrastructure and additional airwaves. And since the middle of 2016, slashing prices to protect turf given the debut of Reliance Jio (RJio),” the CRISIL report said. 

In the third quarter of FY17, Idea’s net loss mounted to Rs 385.5 crore while Airtel’s net profit fell 55% to Rs 503.7 crore.

Telecom wars with Jio may have an unintended consequence: Your wallet

“It is clear from the operating matrices of domestic telcos and our analysis of global players that better pricing of premium subscribers, higher share of sticky post-paid subscribers, and lower churn drive the need for leadership position in the telecom space,” the report said.  

However the companies’ churn rate which went up to 6% is high in comparison to international markets wherein this rate is below 1% for the market leader.

“The distinct advantages enjoyed by the market leader, make a compelling case for continued intense price based competition in India’s data market. It is a big positive for 4G penetration – both in terms of subscriber base as well as data usage which is likely to cross over 80% in the medium term. However, it would severely impact cash flows in an industry with already stretched balance sheets, eventually impacting investments in network enhancement,” the report added.