Winner takes it all: India's telcos see a brighter day

The Indian telecom industry is on an upswing, with the top three telcos, Reliance Jio, Bharti Airtel and Vodafone Idea, recording an increase in average revenue per user (ARPU) on the back of tariff hikes announced by them in November 2021.

Airtel recorded the steepest ARPU increase from INR153 (US$2.10) in the second quarter to INR163 ($2.20) in the quarter ending December 2021. Vodafone Idea's ARPU recorded an increase of 5.2% to touch INR115 ($1.54), up from INR109 ($1.46) in the September 2021 quarter.

Smile please: India's telcos celebrate brighter days as government intervention and higher tariffs translate into more money for everyone.  (Source: Nicolas DEBRAY from Pixabay)
Smile please: India's telcos celebrate brighter days as government intervention and higher tariffs translate into more money for everyone.
(Source: Nicolas DEBRAY from Pixabay)

For Jio, ARPU increased from INR143.6 ($1.93) in Q2 to INR151.6 ($2) in Q3. However, one needs to consider that Jio shares the consolidated ARPU, which includes home and enterprise users as well. This means that Jio’s wireless ARPU might be considerably less.

Airtel has indicated that there might be a tariff hike again this year and it hoped to take the ARPU to INR200 ($2.67) in 2022.

Bottom line

Where overall revenues are concerned, Airtel recorded a consolidated profit of INR8300 million ($110 million) compared with INR11,340 million ($151.5 million) in the September quarter.

In comparison, Reliance Jio's profit increased by almost 9% to reach INR3,7950 million ($510 million).

At the same time, Vodafone Idea reported a loss of INR72.3 billion ($971.7 million) in the quarter ending December 2021, compared to a loss of INR45.3 billion ($609 million) in the same period the previous year.

Table 1:

Service providers Q3 ARPU (INR/$) Q3 Subscriber base (mn)
Reliance Jio 151.6 ($2) 421
Bharti Airtel 163 ($2.20) 356
Vodafone Idea 115 ($1.50) 247.2
Source: Company earnings reports.

Subscriber base: up and down

Regarding subscriber base, Airtel is the only telco to have recorded a marginal increase in its subscriber base, from 355 million in September 2021 to 356 million in December 2021.

Airtel's 4G subscribers increased by 29.9 million year-on-year, and 3 million quarter-on-quarter, to reach 195.5 million. They now comprise 61% of its overall customer base.

Surprisingly Airtel recorded a drop in data usage per subscriber (even as it recorded an increase in the number of 4G subscribers), which came down from 19GB per user per month to 18.7GB per user per month. This might be because of the tariff increase in the quarter.

Meanwhile, Vodafone Idea lost almost 6 million subscribers in December 2021 – though its 4G base grew from 116.2 million in the September quarter to 117 million in the third quarter.

For Vodafone Idea, data usage per 4G subscriber increased by 12GB per month in December 2020, to 14GB per month in December 2021.

Jio lost 8.4 million subscribers in the December 2021 quarter. Interestingly, Jio launched JioPhone Next, an affordable smartphone developed in collaboration with Google, in the December quarter, which should have helped it add more.

The loss of subscribers by Vodafone Idea and Jio would have helped them record an increase in ARPU. This means that Airtel, the only telco to gain new subscribers, may have a better quality of subscriber when compared to Jio and Vodafone Idea.

On the home broadband front

A segment that is recording robust growth for both Jio and Airtel is home broadband.

For Jio it was a landmark quarter, as it replaced Bharat Sanchar Nigam Limited (BSNL) as the country's largest wireline service provider. It now has 5 million home broadband subscribers.

"Homes business segment continues to demonstrate strong revenue growth of 40.4% YoY with customer net additions of ~ 341 K during the quarter to reach to a total base of 4.16 million. LCO partnership model continues to vitalize our growth, we are now live in 586 cities through this model with overall operations in 672 cities," says the Airtel press release.

On the road to 5G

With the 5G spectrum auction all set to take place later in 2022, the telcos are preparing financially and technologically. They are using spectrum allotted by the government to carry out different 5G trials in different parts of the country.

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Google recently invested $700 million in Airtel for a 1.28% stake. In addition, the company's board recently approved raising $1 billion in debt.

A part of these funds will help Airtel acquire 5G spectrum and set up the network. While announcing results, Jio revealed that it has completed 5G coverage planning for 1,000 top cities.

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— Gagandeep Kaur, contributing editor, special to Light Reading

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