Telecom sector update – Bharti Airtel’s performance shines again

In Q3 FY21, consumer spend on mobile services rose 4.6% quarter-on-quarter/20.9% year-on-year to Rs 390 billion on benefit of price hike and 4G penetration. Postpaid net revenue dipped 8.1% YoY, while it was up 0.4% QoQ on rising subscribers. Prepaid net revenue grew 6.2% QoQ/34.1% YoY and average revenue per user rose 5.6 QoQ/35.7% YoY to Rs 95. 4G subscriber addition was strong at 3.3% QoQ (net addition: 22.4 million) to 698 million. Bharti Airtel Ltd.’s 4G subscriber market share improved to 23.7%, up 110 bps QoQ/320 bps YoY, and the company has been gaining market share in data usage, which rose 170 bps QoQ/550 bps YoY to 32% (significantly narrowed gap with its adjusted gross revenue market share, which is a positive).

The Telecom Regulatory Authority of India (Trai) has released the sector’s performance indicator report for Q3FY21. Highlights

• Consumer spend on mobile services(post-GST) rose 4.6% QoQ / 20.9% YoYto Rs390bn in Q3FY21 and net revenue (deducting inter-company settlements) rose 5.5% QoQ / 27.9% YoY to Rs351bn. ARPU (based on consumer spend) rose 4% QoQ / 22.1% YoY to Rs113(Rs138including GST) on tariff hikestaken in Dec’19.Postpaid net revenue grew 0.4% QoQ / fell 8.1% YoY to Rs37bn in Q3FY21. Prepaid net revenue rose6.2% QoQ (34.1% YoY) to Rs314bn. Postpaid ARPU (based on net revenue) dipped3% QoQ (fell 13.4% YoY) to Rs227and prepaid ARPU was up5.6%QoQ (35.7% YoY) toRs95. Prepaid revenue also benefitedon shift from 2G to 4G.

• 4G sub base grew 3.3% QoQ (22.4mn net add) to 698mn and RJio’s 4G submarket share fellto 58.6% (down125bps QoQ) while BhartiAirtel’s improved110bps to 23.7%. VIL’s sub market share was stableat15.7%. Industrywide3G subs continue to decline fast and were down 2.5mn QoQ to 26mn.

Total sub-base expanded0.5% QoQ (net add: 5mn) to 1,154mn.Postpaid subsrose4.4% QoQ (net add: 2.3mnsubs) to 55mn. Bharti’s postpaid sub marketshare rose to 29%, up 10bps QoQ, while that for VILreducedto 37.6%, down 240bps

• Data usage market share rose 170bps QoQ for BhartiAirtel. Data usage grew 4.7% QoQ to 26,405-bn MB led by 4G segment growth of 5.3% QoQ to 25,631-bn MB (andcontributed 97.1% to total data usage). 2G data volume dipped13.4% QoQ and 3G data volume was down12.7% QoQ. Bharti Airtel and VIL’s data usage market shares were 32% (up 170bps QoQ) and 17.0% (down 20bps QoQ),respectively.

Industry minutes rose3.7% QoQ to 2,711bn. Bharti Airtel’s minute market share improved to 34.1%, up 120bps QoQ, while VIL’s stood at 20.2%, down 100bps QoQ. RJio’s minute market share rose 30bps QoQ to 36%.

• Fixed broadband subs rose strong 5.5% QoQ (16.5% YoY, net add: 1.17mn) to 22.3mn.This was led by 25% QoQ / 156% growth in FTTH subs to 6.9mn,while DSL continues to decline at 8.8mn, down 5.2% QoQ / 21.5% YoY. RJio’s market share inchesto 9.3% of total FBB subs,while it is 30% of FTTH subs. Bharti’s market share in FBB has been stable at 12.6% despite RJio’s aggression. BSNL’s market share dipped930bps to 34.5% in the past one year.

 ICICI Securities