Telecom revenue during the third quarter of the current fiscal indicates that the sector is coming out of the financial stress caused to the entry of Reliance Jio.
The latest sector numbers published by TRAI reveal that net mobile revenues in India rose 4.5 per cent quarter on quarter to an annualised $25 billion in 3QFY21.
“This is in line with the peak levels seen before Jio’s entry. Recovery in sector revenues weakens the case for floor tariffs since revenue pressure was the key reason cited for introducing floor tariffs,” according to analysts at brokerage firm Jefferies.
Jio’s entry with cheap data rates and zero tariff for voice calls in 2016, had disrupted the telecom business model for incumbent operators. However, over the last year, all operators, including Jio have been increasing tariffs.
The rise in revenues in third quarter was led by urban-centric markets with metros and A-Circles reporting a 10 per cent and 5 per cent QoQ rise, respectively. Rural centric B-Circle and C-Circles reported a slower 3-4 per cent QoQ growth, respectively.
“This is a reversal of the trend seen in 1QFY21 and possibly reflects the migration of people from rural to urban areas as cities open. A similar trend is visible in active subscribers with metros and A-Circles adding 38 million while B-Circle and CCircles saw a 20 million decline over second half of calendar year 2020,” Jefferies said.
Market share shifts continued with Reliance Jio gaining 445 basis points share and Bharti Airtel gaining 120 basis points share over 9 months of FY21.
Vodafone Idea lost 620 bps market share, taking its market share to 21 per cent, nearly half of what it was in FY17. Vodafone Idea’s revenue market share losses are no longer just being driven by its weaker markets.
During 9MFY21, nearly 60 per cent of Vodafone Idea’s 620bps market share loss came from its top-3 markets that form 35 percent of its revenues. Despite these markets growing at 12-26 per cent YoY, Vodafone Idea has witnessed a decline of 3-10 per cent YoY in net revenues here.
Overall, sector revenues are up 40 per cent from lows of 4QFY19 but are still marginally lower (1 per cent) than sector’s historical quarter high reported in 1QFY17.
“We see Reliance Jio and Bharti Airtel as well-placed to benefit from sector growth; the latter has 4G penetration at 54 per cent of its total mobile subscribers and Arpu 10-24 per cent ahead of peers,” CLSA said in a research report. The HinduBusinessLine