1. Even as Reliance Jio free services impact hangs fire, Bharti Airtel, Idea revenues grow slower than expected

Even as Reliance Jio free services impact hangs fire, Bharti Airtel, Idea revenues grow slower than expected

Airtel’s average data revenue per user was R201, a fall of 0.5% q-on-q, while at Idea it fell 8.5% sequentially to R130

By: | Mumbai | Updated: November 9, 2016 6:38 AM

Revenues from data services at Bharti Airtel and Idea Cellular grew slower than anticipated in the three months to September. While market leader Bharti Airtel reported a 1.4% growth sequentially to R3,576 crore, at Idea they decreased sequentially 2.0% to R2,010 crore.

The average data revenue per user (Arpu) at Airtel was R201, a decrease of 0.5% quarter-on-quarter, while at Idea it fell 8.5% sequentially to R130. Bharti Airtel’s data volumes growth came in at 13% on a Q-o-Q basis, a little lower than Idea’s 15%. However, realisations for both fell by close to 10% Q-o-Q.

Airtel’s data revenue in Q1FY17 was up 5% sequentially from Q4FY16, as compared with just 1.4% growth during the quarter ended September this year. The company said earlier that it aimed to boost data revenue but has been unsuccessful due to the entry of Reliance Jio and its free services.

Similarly, Idea Cellular’s data revenues have been slowing; the telco reported a robust 15.4% Q-o-Q data volume growth in Q2FY17, but realisations declined 11.4% sequentially. “We expect data realisations to remain under pressure as telcos increase discounts to counter subscriber churn to Reliance Jio (RJio),” an Edelweiss report said.

According to Kotak Institutional Equities, the full impact of the Jio launch will be visible only by the third quarter.

The overall telecom market witnessed a massive disruption in data pricing since the entrance of Reliance Jio, as the company came out with free services till the end of December. Despite interconnect issues and gradually decreasing internet speeds, Jio has managed to amass 16 million customers till September 16 and is expanding aggressively.

Counterpoint analyst Tarun Pathak said, “The entry of Jio in the market has proved to be an inflection point when it comes to data usage.”

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