Railtel Corporation of India, the telecom unit of Indian Railways, said it does not expect to lose subscribers to rival operators like Reliance Jio and Bharti Airtel, even as it promised to take its RailWire services to even the tiniest of towns this year.
RailTel Chairman and Managing Director Punit Chawla said his company is planning to double the number of subscribers this year to over 8 lakh from around 3.6 lakh. During the just-concluded financial year 2020, RailTel saw its revenue from the RailWire division go up by around 87%.
Since the end of the financial year, said the CMD, the total number of RailWire connections have increased by another 12.5% between April 1 and June 15 due to the impact of COVID-19. “In the last two weeks, the growth has picked up further,” he said.
Chawla’s comments come in a context of the extremely fast expansion of wired broadband services from India’s top two telecom operators, Reliance Jio and Bharti Airtel.
Jio, the most aggressive, has been adding close to 2 lakh wired subscribers every month from late 2020, while Bharti Airtel is adding around 1 lakh new wired subscribers per month, including via resellers such as local cable operators.
RailWire too has a reseller-focused model, under which the company provides upstream bandwidth, provisioning, marketing and billing services, while cable operators are tasked with customer acquisition and the provision and maintenance of last-mile connectivity.
PRICING PRESSURE
Nevertheless, the company has come under increasing pricing pressure as private competitors Reliance Jio and Bharti Airtel cut their broadband tariff by nearly half over the last one year.
Even state-owned Bharat Sanchar Nigam Ltd has been forced to drastically cut its prices to keep them in line with the offerings of private players.
RailWire’s response has not been as aggressive, as it has reduced its pricing by around 25% or so over the last 3-4 months.
Because of this, there exists a pricing gap of around 25-30% between RailWire on the one side and Jio, Airtel and BSNL on the other.
However, Chawla said RailWire has two advantages compared to the others — a network that reaches several times the number of towns compared to the private operators, and the quality of connectivity it provides.
“We are present in many niche [rural] areas where we are able to provide much more reliable services than these providers,” he said. “Our network goes wherever the railway goes.”
Going forward, he said, the company will focus more and more on launching its services in remote areas where other players are not there.
He pointed out that the company has already taken high-speed broadband connectivity to 6,020 railway stations. “Out of this 6,020-plus railway stations, about 5,000 are in the rural areas, where broadband facilities are very less,” he pointed out.
In most of these areas, people have to rely on 4G networks for broadband, and these can be very inconsistent in their performance.
RailWire’s extensive broadband infrastructure has been built up over the years as part of an Indian Railways scheme to wifi-enable its railway stations.
But now that the fiber has been taken to all these stations, Chawla pointed out, it is very easy for the company to use these PoPs or points of presence as delivery points of upstream connectivity to local distributors. “We are in a position to deliver these services very fast,” he noted.
To be fair, Chawla does have a point in that both Jio and Airtel are present only in a few hundred cities in India, a fraction of RailTel’s PoPs. Also, unlike wireless and cheap, local broadband providers, RailWire has a reputation in the market of delivering promised speeds.
Still, even if RailWire can charge a premium in rural areas where other players are not present, the company is facing severe pricing competition in urban and semi-urban areas, where Jio and Airtel are increasingly making inroads.
Chawla, however, maintained that there are no such areas where it is facing large-scale churn and migration of subscribers in favor of Jio and others.
“No place where there is high churn. We are taking all actions…We are matching any other operator,” Chawla expressed his confidence.
“We are strengthening our network, we are improving our services. We have recently revamped our service, we have launched an app. There is no reason for people to leave us in huge numbers. One or two subscribers, here and there, will always be there,” he added.