BUSINESS
The commissions paid by Reliance Jio to its dealers in FY24 were the lowest compared to spends by peers Bharti Airtel and Vodafone Idea, according to estimates from Jefferies. The telecom operator’s dealer commissions were at 3% of sales compared to Bharti Airtel ’s 4% and Vodafone Idea at 8.4%. Dealer commissions indicate the telcos’ spends on promotional activities for acquiring customers. The spends are higher for Vodafone Idea as the company has been losing subscribers to peers in absence of 5G services. Reason for Jio’s low spends can be attributed to the Reliance group’s large presence. The company pays dealer commission to Reliance Retail, a Reliance group company. “We note that Reliance Jio ’s commissions paid to RRL (Reliance Retail) at Rs 3,000 crore were up 8% YoY, and grew slower than the overall revenue growth of 10% YoY. This comes as a surprise in an environment where its peers are witnessing a sharp rise of 16-26% in their dealer commissions,” Jefferies said in a note. While Airtel’s spends on dealer commissions were at Rs 6,000 crore, whereas for Vodafone Idea it was Rs 3,583 crore. According to brokerage house CLSA, based on Airtel’s higher dealer commissions, its sales and marketing costs rose 13% YoY to Rs 8,133 crore in FY24. Jio’s sales and marketing expenses were lower at Rs 2,500 crore. Jio’s customer servicing expenses, at 0.2% of revenues, were much lower than that of Bharti Airtel at 0.6% and Vodafone Idea at 1%, Jefferies said. None
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