1. Reliance Jio lands big blow, but Airtel, Vodafone, Idea Q2 saved by bundled plans as data, voice volumes surge

Reliance Jio lands big blow, but Airtel, Vodafone, Idea Q2 saved by bundled plans as data, voice volumes surge

The July-September earnings of the country’s top three telecom operators — Bharti Airtel, Vodafone India and Idea Cellular — show that while competitive pressures that began with the launch of commercial services by Reliance Jio continue on the incumbents, thanks to bundled plans their voice and data volumes have surged.

By: | New Delhi | Published: November 15, 2017 6:36 AM
Reliance Jio, Jio, Reliance Jio lands big blow, Airtel, Vodafone, Idea, bundled plans as data, voice volumes, Bharti Airtel The July-September earnings of the country’s top three telecom operators — Bharti Airtel, Vodafone India and Idea Cellular — show that while competitive pressures that began with the launch of commercial services by Reliance Jio continue on the incumbents, thanks to bundled plans their voice and data volumes have surged. (IMage: PTI)

The July-September earnings of the country’s top three telecom operators — Bharti Airtel, Vodafone India and Idea Cellular — show that while competitive pressures that began with the launch of commercial services by Reliance Jio continue on the incumbents, thanks to bundled plans their voice and data volumes have surged. However, realisations on both counts continue to decline. Since data has emerged as the major area in the competitive fight, it’s the growth in volumes here that is keenly tracked by analysts. Data volumes for Vodafone, which declared its earnings on Tuesday, during the second quarter increased by 61.4% quarter-on-quarter, which is marginally lower than Bharti’s 65.9% and Idea’s 73.5%. Apart from the overall data volume growth at 73.5%, Idea’s broadband (3G and 4G) volume growth was at 81% on a quarterly basis during the period. Broadband subscribers grew by 3.2 million to 29.6 million though data subscriber remained largely unchanged at 38.1million. Its blended data average realisation per MB of Rs 2.70 contracted by 49% over the previous quarter due to pricing pressure led by Jio’s entry.

The company reported average usage of 4.7GB per broadband subscriber. In comparison, Bharti Airtel added 3.2 million data subscribers and 6.3 million mobile broadband subscribers, with average usage reaching 4GB per subscriber. Vodafone India did not provide the break-up of its data usage and realisation. Vodafone’s blended average revenue per user declined 6.6% quarter-on-quarter to Rs 132, while the same for Bharti at Rs 145 was down 6.3% quarter-on-quarter, and Idea’s at Rs 132 was down 6.4% quarter-on-quarter.

Vodafone India’s July-September revenues declined by 6.5% quarter-on-quarter to Rs 9,188 crore. In comparison Bharti Airtel’s revenue had declined by 5.2% on a quarterly basis and Idea’s by 8.6% during the same period. The July-September quarter is seasonally a week quarter for telcos. On the subscriber front, Vodafone lost 4.5 million subscribers during the quarter, taking its total subscriber base to 207.4 million. In comparison Bharti added 1.4 million users while Idea lost 6.6 million users. The combined base of Idea and Vodafone saw an erosion of 11.1 million users.

Vodafone’s adjusted Ebitda margins for H1FY18 declined 350 basis points versus H2FY17 to 21.3% on account of significant revenue erosion. While Idea and Vodafone’s margins continued to deteriorate further during the quarter, Bharti’s India business margins expanded by 30 basis points quarter-on-quarter on account of cost control initiatives. “We believe that Bharti continues to execute better than Idea and Vodafone on subscriber acquisition as well as cost side. Although Idea+Vodafone is likely to benefit from synergies from the proposed merger, it also carries execution related risks,” brokerage Edelweiss said in its note.

  1. A
    Apte
    Nov 15, 2017 at 10:06 am
    1. Let us not forget that till the entry of Reliance Jio in the telecom services market three companies, Bharti Airtel (BA, Vodafone Idea, were almost dictating terms to customers. There were exclusive internet packages without voice call service facility. 2. After entry of R Jio, overall environment has become very compe ive and voice calls became free. Initially, BA Vodafone-Idea were uncomfortable with compe ion from R Jio but it appears that slowly the telecom sector is gearing-up to face new challenges. 3. The Union Telecom ministry should look at the new scenario in an unbiased manner and offer concessions to the telecom sector in areas spectrum pricing. As I see it, tariff wars may soon be things of the past, as all telecom service providers make efforts to increase their customer base with attractive voice call and data offers. Ultimately after a huge expansion of digital services, I believe it will be a win-win situation for both telecom companies and their customers.
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