Telecom penetration: Mumbai leads with a 3G penetration of 21% followed by Delhi (19%).
Five years after the auction of 3G spectrum in the country, five circles – Mumbai, Delhi, Kerala, Karnataka and Tamil Nadu – have shot ahead in the data sweepstakes. Of the 93 million Indian 3G subscribers as of June 2015, these circles account for over 38 million subscribers accounting for 41% of the 3G user base. They also account for 35% of the total telecom revenues and 25% of the country’s mobile subscriber base, according to a CLSA report.
Mumbai leads with a 3G penetration of 21% followed by Delhi (19%), Kerala (17%), Karnataka (13%) and Tamil Nadu (12%). These five circles together account for a 15% 3G penetration as compared to a national 3G penetration of a mere 9%. The higher data usage also leads to higher ARPUs. The five circles have an ARPU of Rs 225 which is 40% higher than the national average of Rs 161. The revenue growth in these five circles at 8% is higher than the industry average of 6%. At the other end of the spectrum are Bihar, Orissa and UP (East) that have a 3G penetration of just 4%.
Going by the higher ARPU and higher penetration of 3G, these markets are in all likelihood going to lead in the adoption of 4G services.
Market leaders Bharti Airtel and Vodafone lead these five markets with 58% revenue share, which is higher than their overall market share of 55%. While these two operators cater to the top end of the market (with ARPUs of Rs 300 and more), the mid-segment (Rs 230) is catered too by Idea Cellular and Tata Teleservices. The rest of the operators in these circles cater to the low-end (Rs 110-180). Considering that the high-end 3G subscribers will be the early adopters of 4G, it is Bharti Airtel and Vodafone that could face the biggest challenge with the introduction of 4G services by Reliance Jio.
However, Bharti Airtel has comparable spectrum to match Jio in these circles. More importantly, it has already launched 4G services in these circles. Though Vodafone has the second-highest spectrum holdings here, limited 4G spectrum could result in a higher impact. As a sector, it will be the growth of mobile data revenues that will drive future growth.