Jio and Airtel have been gaining market share on the back of superior network and higher capex spends, and this trend could continue going ahead. After two consecutive quarters of AGR growth, VIL’s revenue market share in the June quarter was down over 600 basis points on a sequential basis, according to Emkay Research. The company’s share, which was over 38 per cent at the start of FY19, has now come down to 22.8 per cent. While Jio’s market share has been on an uptrend, Airtel’s has been stable. Jio gained 466 basis points share in the June quarter (QoQ) to 41 per cent, while Airtel improved its share to 34.2 per cent with a gain of 186 basis points on a sequential basis.
The need to increase average revenue per user (ARPU) to fund AGR obligations will make tariff hikes imminent. Bharti Airtel
has been the single biggest beneficiary of tariff hikes among the three telcos, with a 22 per cent increase in ARPU since the hike last year, as compared to 6-8 per cent for Jio and VIL.
While Jio is best placed given the equity infusion into Jio Platforms and debt restructuring, Bharti Airtel
can gain from a duopoly situation. An analyst at a domestic brokerage says: “Bharti Airtel has comfortable free cash flows to meet its payment obligations and has the ability to raise capital. Its average revenue per user is higher than Jio. The incremental conversion of 2G customers to 4G network
and impending tariff hike will benefit it further.”
Bharti Infratel is the other player which is on a weak wicket, given the pressure on VIL’s financials. Analysts believe that cut back due to cost synergies and limited capex of VIL will hit the tower company’s tenancies and revenues. While the merger with Indus Towers removes an overhang, brokerages are negative on the company’s prospects due to worries over cancellations and pressure on pricing.