The share of VAS, which was traditionally between 10-12% of an operators revenue, is expected to reach 15-18% in the fourth quarter, given the high decibel 3G promotions from these operators.
3G services will further spur the uptake of VAS services as the high speed mobile broadband will give the Indian mobile consumer an opportunity to communicate, engage and entertain like never before. Idea has already registered 1 million 3G users on our network within the first month of the launch. Early trends indicate high uptake of wireless broadband data by existing 3G handheld users, said Sashi Shankar, CMO, Idea Cellular.
Bharti Airtel, will be announcing its results in on May 5.
For 4QFY2011, we expect VAS share as a percentage of mobility revenue to grow by 300bp and 200bp to 14.1% and 13.2% for Airtel and Idea, respectively, said Srishti Anand and Ankita Somani of Angel Broking in a note.
Growth in VAS share is expected to reduce the down-slide of average revenue per minute (ARPM).
ARPM decline would be triggered by readjustment of postpaid tariffs due to mobile number portability.
Due to free minutes and lower tariffs offered due to MNP, analysts expect the combination of flat ARPM and low growth in minutes of usage (MOU) to pull down average revenue per user (ARPU) by 2.1%, 2.5% and 5.2% for Bharti Airtel, Idea Cellular and Reliance Communications (RCom), respectively.
Industry veterans expect revenue growth for all the three listed telecom companies- Airtel, Idea and RCom.
However, on profit after tax (PAT) level, barring RCom, which will see decline in PAT, the other two would be reporting an increase in their bottomline, say analysts.
In a flash note, Rajiv Sharma from HSBC Securities said that Bhartis higher sequential growth is largely due to the fact that in 3Q FY11, Bharti has incurred one time re-branding expenses in both India and Africa.
Separately, we expect this quarter to be robust for Idea Cellular, with about 10% growth, but muted for RCom. Our skepticism around RCom is driven by its rebalancing initiatives (this would limit usage growth) and 3G launch expenses, added Sharma.