Airtel’s growth was driven by ARPU and Jio’s by subscriber growth in FY23

Even as Reliance Jio continues to lead the telecom market, especially in the lower circles, Airtel is looking to close the gap with its peer on the back of its focus on rural areas. The Sunil Bharti Mittal-owned telecom operator has gained revenue market share in 13 out of 14, B and C circles in FY23, compared to Reliance Jio gaining share in only three such circles, according to analysts.

The B and C circles include markets such as Kerala, Punjab, Haryana, Uttar Pradesh (West), Uttar Pradesh (East), Madhya Pradesh, Rajasthan, Odisha, Assam, North East and Bihar, among others.

Jio is seen to have a strong appeal in non-metro and lower circles, largely owing to its brand image as an affordable player, especially when it entered the market in 2016 with unlimited data at no cost. Although, Jio continues to be the top player in these regions, Airtel gaining revenue market share in these circles indicates the company’s focus to acquire subscribers there.

While there has been an increase in revenue for both operators in all the circles, Jio has gained market share only in Kerala, Punjab, and Jammu & Kashmir in the B and C circles category. On the other hand, Airtel lost share only in Jammu and Kashmir, according to data by ICICI Securities.

“We could have gone there (in rural areas) earlier, but I think the time is right for us to expand into these areas. This expansion will provide a fair market share and provide tailwind to the business. We are doing a lot of sophisticated data science to decide which are the places that we really need to rollout,” Airtel CEO Gopal Vittal had said in February. According to Vittal, out of 60,000 villages, the company has identified roughly 40,000 high potential villages to focus on profitability.

For Airtel, B and C circles account for 51% of total adjusted gross revenues (AGR) of Rs 71,825 crore, whereas for Jio they account for 57% of the total AGR of Rs 89,280 crore.

“Market share gains for Jio have been driven mainly by A and B Circles, while Bharti’s market share gains have come mainly from B & C circles — possibly a reflection of its network expansion in rural markets,” said brokerage house Jefferies in its report. “Notably, while Bharti’s growth was driven by Arpu growth, Jio’s growth was driven by subscriber growth,” Jefferies said.

In FY23, Bharti Airtel’s overall revenue market share grew to 36.2% from 35%, whereas Reliance Jio’s share rose marginally to 41% in FY23, according to average estimates of three brokerage house. While Vodafone Idea’s market share fell to 17% in FY23 from near 18%, the company broadly maintained its market share in metros such as Delhi, Mumbai and Kolkata, analysts said.

The telecom industry’s revenue grew 14% y-o-y to Rs 2.2 trillion in FY23, driven primarily by 16% yoy growth in Arpu on the benefits of the December 2021 tariff hikes and subscriber mix improvements.

According to brokerage house CLSA, Metro and C-circles regions account for 24% of sector revenue, whereas A and B circles account for the remaining 76%.

“Reliance Jio and Bharti together controlled 77% of sector revenue and with delayed 5G rollout for Vodafone Idea, share domination by top two will still rise to 81% by FY25,” CLSA said.

“Rising competitive intensity (RJio’s aggressive family postpaid plans and unlimited 5G data offerings) to attract higher value subscribers and several key state/general elections over the next 12 months would likely delay tariff hike to June 2024 (after general elections),” brokerage house Kotak Institutional Equities said, adding that delayed tariff hikes would hurt Vodafone Idea growth.

In FY23, Vodafone Idea has seen its revenue market share (RMS) fall to single digits in eight out of the 22 circles in which the company provides services. The telco’s revenue market share in Karnataka, Bihar, Orissa, Assam, North-East, Uttar Pradesh (East), Himachal Pradesh and Jammu & Kashmir is now in the range of 1.5-9.5%. Financial Express