Teji Mandi: Three things investors should know on January 29, 2021
Teji Mandi

RJio staged a trend reversal :

Reliance Jio Infocomm Ltd. added the most active subscribers among peers in November, beating Airtel. Jio added 5.4 million subscribers over the previous month in November. Bharti Airtel added 3.9 million, while Vodafone Idea Ltd. lost 1.9 million subscribers.

India's telecom industry added three times more active users in November MoM. Despite a decline, Bharti Airtel's active user percentage remains well above the industry. For Bharti Airtel, the average was at 96.6% as against the industry average of 83.8%. RJio's average active user base was at 79.6% while for Vodafone Idea, it was at 89.0%.

RJio has scripted a mini turnaround by adding more active subscribers in November. It was the best performance clocked by Jio in the last six months. But, the real battle between both these giants is going to play out over the 5G front. Quality of subscribers adding currently will determine who will have the edge over the other.

Weak Diesel demand:

After a quick rebound, demand for Diesel is slowing down. Diesel accounts for around 40% of India's total fuel consumption. And, it is a crucial indicator to gauge the condition of the economy.

Due to the slowdown in demand, diesel consumption is not expected to get back to pre-virus levels until March 2022, said M Surana, chairman of Hindustan Petroleum Corp.

Diesel is the "power" fuel that most of the economy depends upon. Factories, construction, agriculture as well as commercial vehicles, all run on diesel. Hence, muted diesel demand directly translates into the slowdown of the economy.

A contrasting argument here is that a slowdown in diesel's demand doesn't reflect a true picture of the economy. India is moving towards a gas-based economy and gas demand seems increasing. But, we believe that argument doesn't hold ground. Gas consumption is still at a nascent stage. It has a long way to go before replacing diesel as a primary source of industrial energy consumption.

Make way for 5G :

The government has reduced the time period for telecoms to bring in the new technology. DoT has reduced the period to six months from the earlier period of one year.

A new notification will be applicable for new spectrums, for auction on March 1. The government is not selling any 5G spectrums in this round and policies are yet indecisive. A lot of work is yet to go into preparing the policy framework. But, the first step is always welcome.

It has also come after a day Airtel demonstrated its 5G readiness. RJio has already expressed its willingness to launch 5G services by the end of 2021. Though further clarity on 5G rollout is yet to emerge, we expect this space to see a lot of action in the coming months.

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