Industry revenue growth remains steady, ICICI Securities

Industry AGR (incl. NLD) grew 4% QoQ / 19.7% YoY to Rs534bn. Bharti Airtel has lost AGR (incl. NLD) market share of 50bps QoQ due to correspondingly higher growth for RJio. RJio has a bigger sub-base with long validity recharge, which shows it benefited from tariff hike spillover. Bharti’s circle-wise AGR is not comparable for Q1FY23. It appears like the company has changed (cut) carriage charges for NLD, which has led to NLD AGR dip by 26.5% and boosted its circle-wise AGR. VIL’s AGR (incl. NLD) market share was down 50bps QoQ to 17.7%. RJio’s AGR (incl. NLD) market share rose 6bps QoQ to 40.9%, and benefited from tariff hike. BSNL’s AGR (incl. NLD) rose 23.7% QoQ to Rs32bn (must have some one-offs), which optically impacted the top-3 players’ market share.

• Industry AGR (incl. NLD) rose 4% QoQ / 19.7% YoY to Rs534bn. Top-3 operators’ AGR (incl. NLD) rose 3% QoQ / 21.2% YoY driven by tariff hikes. The benefit of premiumisation has been limited and SIM consolidation should have offset some growth. Q1FY23 annualised revenue stood at Rs2,135bn, and AGR (incl. NLD) was Rs1,902bn for FY22. Industry gross revenue was up 1.9% QoQ (21.1% YoY) to Rs597bn and included one-off gains for BSNL in Q4FY22.
• Bharti’s AGR (incl. NLD) was up 2.6% QoQ / 27.5% YoY to Rs189bn. Bharti’s AGR (incl. NLD) market share dip to 35.5%, down 50bps QoQ / 220bps YoY. Its incremental AGR QoQ was Rs5bn vs Rs9bn for RJio. This was due to higher long-validity customers on RJio, which reflects the benefit of tariff hike in Q1FY23. However, Bharti’s circle-wise AGR analysis is not comparable in our view as we see NLD AGR has declined 26.5% QoQ to Rs18bn. This indicates change (cut) in NLD carriage fees which has led to increase (re-base) in circle-wise AGR for Bharti during Q1FY23. The circles that have shown high growth are: Delhi (+9.9% QoQ), UP east (+17%), WB (+8.1%), HP (+12%), and Bihar (+15.9%). Bharti was already outperforming in C’ circles post expansion in 4G network.
• VIL’s AGR (incl. NLD) market share fell to 17.7% (down 50bps QoQ). VIL’s AGR (incl. NLD) rose 1% QoQ and 11.2% YoY to Rs95bn. Within leadership circles, Gujarat, AP, TN and Kerala underperformed while UP east, MP and Mumbai have done well. VIL has performed well in its established circles with AGR growth of 2.9% QoQ. Non-focus circles continued to struggle with just 0.8% QoQ rise in AGR.
• RJio’s AGR (incl. NLD) rose 4.1% QoQ / 20.7% YoY to Rs218bn. RJio’s AGR (incl. NLD) market share was 40.9%, up 6bps QoQ. AGR growth has been relatively higher in metros at 4.5% QoQ and A’ circle at 4.6% QoQ as these circles have higher subs with long recharge validity and benefit of tariff hike would have kicked-in in Q1FY23. B / C’ circles AGR rose at 3.9% / 3.5%, respectively. In circle-wise analysis, RJio has optically lost market share due to higher AGR allocation for Bharti (one-time rebase). However, RJio has under-performed in a few circles – Mumbai (down 1% QoQ) and Kolkata (down 0.6% QoQ) – while Delhi has done well with growth of 9.5% QoQ. Among non-metro circles, only HP under-performed with growth of just 0.5% QoQ.

For report, https://www.communicationstoday.co.in/industry-revenue-growth-remains-steady/

CT Bureau