Top 3 telcos grab 75.2% revenue market share in Q1

The top three players of Indian telecom — Bharti Airtel, Vodafone and Idea — continued to dominate the market share, contributing 75.2 per cent of industry revenues in the June quarter.

Bharti Airtel, the country’s largest telco by subscriber base, gained the highest revenue market share (RMS) in the June quarter, while the third largest telco, Idea Cellular, saw only a marginal gain in RMS, due to its decision to hike voice tariffs, resulting in volume decline for the company. Bharti expanded its RMS to 32.7 per cent in the first quarter of FY17 over last year, growing by 130 basis points (bps), the highest in the industry, according to a BNP Paribas report.  Meanwhile, Idea Cellular’s RMS grew 50 bps to 19.2 per cent over a year-ago period. Vodafone India’s RMS remained stable at 23.3 per cent, it said.

  • Bharti expanded its RMS to 32.7% in Q1FY17 over last year, growing by 130 bps, the highest in the industry, according to a BNP Paribas report
  • Idea Cellular’s RMS grew 50 bps to 19.2% over a year-ago period
  • Vodafone India’s RMS remained stable at 23.3%

Overall, the telecom industry saw revenue growth slowing down in the first quarter of FY17 over the past year, owing to weak consumer spending and declining data revenue growth. The adjusted gross revenue (AGR) growth of the telecom industry in the June quarter dipped to 4.7 percentage points over last quarter.  In the first quarter of FY17, the AGR grew 6.2 per cent over past year, compared to 10.9 per cent year-on-year in the last quarter of FY16, according to data collated by BNP Paribas.

“Bharti Airtel has seen the most RMS gain over last year, driven by its strong data network. Bharti also benefited on the voice side from a sharp voice-price increase by Idea Cellular in a weak consumer spending environment,” said the BNP Paribas report, adding, “Idea’s voice average revenue per minute increased by eight per cent over the past two quarters, while the top two operators’ stayed flat, resulting in loss of voice volume share for Idea Cellular”.

Another report by HSBC said Bharti has seen sequential RMS gains across markets, except for Rajasthan circle.

Sharp gains have been seen in metro markets and category ‘A’ circles suggest Bharti’s relatively better performance versus other incumbents is driven by data growth, said the HSBC report.

“We believe Bharti, with its pan-India data spectrum capabilities, is best placed to benefit from data growth,” it said.

Bharti’s RMS gain has been broad-based and not restricted to the high data usage markets, in contrast with Idea, which lost revenue share in markets where it was already weak.

Idea saw a sequential decline in RMS in circles, including Mumbai, Delhi, Kolkata and Karnataka, where Airtel and Vodafone are predominant, because of the price hikes, despite being the weaker player, analysts said.

The other reason to lose RMS is that it lacks adequate spectrum to compete against leaders in some of these largest data markets, said the BNP Paribas report. Meanwhile, Idea continued to report RMS gains in circles where it is already a leader, such as Kerala, Maharashtra and Madhya Pradesh. “Idea Cellular may revisit its voice tariffs, going forward, and this may result in a drop in voice realisations (however, subscriber growth may pick up),” said the HSBC report, adding, “However, investors seem to be more focused on upcoming spectrum auctions and data growth and not so much on second quarter revenue growth.”

Reliance Communications (RCom) has not provided revenue data for the June quarter as of yet, but analysts predict a sequential revenue decline because of the shutdown of its code division multiple access, or CDMA, services.

“Some of the customers have been migrated to RCom GSM network, but we expect the transition to have resulted in some revenue loss. We assume that RCom’s first quarter FY17 revenue is the same as its fourth quarter FY16 revenue,” said the BNP Paribas report.

The sector continues to see consolidation, said analysts.

“The quarter saw Videocon services shut down and we expect more to follow,” said BNP Paribas analysts in the report.

Smaller operators, which account for 25 per cent of industry revenue and a much higher volume share owing to low pricing, may look at exit options due to slowing industry growth, a lack of spectrum to offer data services, high debt, a lack of profitability and the imminent entry of Reliance Jio, the report added.

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