The January-March quarter (Q4) earnings of the country’s top two listed mobile operators — Bharti Airtel and Idea Cellular — confirm telecom companies’ worst fear: That their voice revenue, which contributes almost 80% to their overall revenues, is under pressure due to the growing dominance of over-the-top (OTT) operators.
The profitability and revenues of the operators are increasingly getting dependent on data revenue, which is rising — data revenue in the case of Bharti, for instance, registered a growth of 70.4% on a yearly basis — but voice realisations are either remaining static or declining. This does not augur well since the yield from voice services is higher, which cannot be compensated by rising data revenue unless the charges for the latter are not increased by some 6-10 times to protect current revenues. The reason is that while a one-minute voice call yields around 50 paise to the operators, a similar duration internet-based call (VoIP) yields only around 4 paise under the current tariff structure.
In a post-earning press conference on Tuesday, Idea Cellular managing director and CEO Himanshu Kapania underlined the need for having a same service, same rule, which telcos have been articulating for some time and have also stated in their responses to the consultation paper floated by the Telecom Regulatory Authority of India on whether there is need to regulate OTT players.
By one service, one rule, the operators mean that the tariff structure for voice calls and VoIP should be similar. “We are not asking for licensing any application or OTT player. We just want same rules to be applicable for same services. The government should decide what rules and services are applicable in this case,” Kapania said on the issue of VoIP services.
While Idea Cellular’s net profit rose 22.8% to Rs 942 crore sequentially, beating estimates, Bharti Airtel’s net missed forecasts with a 12.7% decline to Rs 1,255 crore. Total revenues of Idea during the period rose 5.1% to Rs 8,422.5 crore sequentially. In the case of Bharti it stood at Rs 23,016 crore, down 0.87% compared with the preceding quarter.
Bharti’s Ebitda margin stood at 35% against 33.54 in the preceding quarter. Consolidated Ebitda was above forecast at Rs 8,051 crore against Rs 7,785.7 crore during the December quarter. The company’s Africa revenue stood at Rs 6,215.3 crore versus Rs 6,627.6 crore during the preceding quarter.
The average revenue per user (Arpu) during the quarter declined to Rs 198 against Rs 202 in the previous quarter in FY15.
In the case of Idea, Ebitda rose 11.3% sequentially to Rs 3,064.5 crore and margins stood at 36.4%. Arpu was flat at Rs 179.
“The margins expanded in 15 of our profitable circles owing to the scale factor due to the expansions undertaken in these circles,” said Idea Cellular’s chief financial officer Akshaya Moondra. “We continue to invest in the remaining seven circles,” he added.
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