Vodafone India to become the second largest carrier by revenue in the Indian telecom space, generating revenues of Rs 6,217 crore in the quarter ended March 2018, up 15% on-quarter.
The new entrant has also quickly narrowed the gap with leader Bharti Airtel whose revenue was Rs 7,087 crore, down about 10% on-quarter, as per data from the Telecom Regulatory Authority of India (Trai).
The Mukesh Ambani-owned Reliance Jio has been able to dislodge the No. 2 carrier by subscribers within 19 months of launching services where it offered free voice and low-cost data, triggering a price war that shows no signs of abating. The razor-edged competition has created more financial difficulties for the already stressed sector saddled with debt of more than Rs 7 lakh crore.
The new carrier has, in fact, escalated the fight of low tariffs, expanding it from the dominant prepaid segment — it makes up 95% of the country’s subscriber base — to the post-paid segment, which makes up the remaining share but contributes around 20-25% of the industry’s revenue.
As per the Trai data, the adjusted gross revenue (AGR) of Reliance Jio — it has secured more than 200 million customers to date — was higher than Vodafone India’s Rs 4,937 crore for the quarter ended March, and also of Idea Cellular at Rs 4,033 crore.
The details have come as Idea and Vodafone India prepare to merge to create a Rs 63,000-crore annual revenue entity with some 430 million subscribers.
Together, the AGR of the combined entity would be higher than those of Bharti Airtel and Reliance Jio.
Overall, the industry AGR from access services fell by 12.6% on-year and 7.4% on-quarter for the March quarter to Rs 35,697 crore, with all private players but Jio showing a degrowth. For access services, the revenue decline was12.2% on-quarter to Rs 25,448 crore as of March 2018.
Revenue of carriers such as Reliance Communications, Tata Teleservices, Quadrant and Telenor declined the sharpest in that order, since they’ve either closed operations or are in the process of doing so. Barring Jio, BSNL is the only carrier to have shown an increase in revenue collection, by a healthy 18% on-quarter to Rs 2,128 crore.
License fee and spectrum usage charges (SUC), which accrue to the government as a percentage share of AGR, have also reduced in quarter ended March 2018. Revenue from license fee fell by 12.8% on-year and 5.5% on-quarter to Rs 2,932 crore and that from SUC fell by 23.4% on-year and 8.8% on-quarter to Rs 1,051 crore as of March end. Goldman Sachs attributed the sequential fall in industry AGR during the March quarter to price cuts in January, reduction in international long distance termination rates and revenue consolidation among large players.
The escalated competition among incumbents and the new operator has led to reduction in average revenue per user (ARPU), a key metric for determining profitability of a telco and of the industry. Trai data show that the blended ARPU per month declined 4.2% on-quarter from Rs 79.4 in the quarter ended December 2017 to Rs 76 in the quarter ended March 2018.
Overall ARPU declined 8% on-year. ARPU of pre-paid segment declined from Rs 67 to Rs 62 in the same period, while ARPU for the post-paid segment increased from Rs 348 to Rs 360.
As the industry players deal with low ARPU rates, customers are making the most of the free voice offers. Minutes of usage per subscriber have reached 584 minutes per month, up from 495 minutes a month in December 2017.