Higher prices make more profitable consumers for India's telcos

A happy revelation from the quarter one results for the three Indian private telcos, Reliance Jio, Bharti Airtel and Vodafone Idea is that all of them have recorded a significant increase in average revenue per user (ARPU) on the back of a price hike announced in November 2021.

When compared with Q1 of the last financial year, Jio’s ARPU grew by 26.9%, while Airtel and Vodafone Idea recorded an increase of 25% and 23% respectively.

Figure 1: There is a strong likelihood that service providers will increase tariffs once before the launch of commercial 5G services later in 2022.
(Source: Nicolas DEBRAY from Pixabay)

There is a strong likelihood that service providers will increase tariffs once before the launch of commercial 5G services later in 2022. The auction concluded earlier in August, and operators are likely to launch in several cities over the next two months.

Subscriber base: up and down

Regarding subscriber base, Vodafone Idea recorded a drop from 255.4 million in the first quarter of the last financial year to 240.4 million in this. Meanwhile Airtel saw an increase from 321 million in the AMJ quarter last year to 362 million this year.

Jio, which lost a significant amount earlier in 2022 because of a SIM consolidation post tariff hike, recorded the maximum drop in its subscriber base from 436 million in Q1 of the financial year 2021-22 to 419.9 million in the Q1 of the financial year 2022-23.

The consumption of data has risen for all service providers. For Airtel, data usage per customer increased from 18.9 GB per month in June 2021 to 19.9 GB per month in June 2022. For Jio, total data traffic was 25.9 in the June 2022 quarter, up by 27.2%.

"We continue to see high data usage per 4G customer at 14.3 GB/month with the total data traffic witnessing healthy sequential growth of 3.6%," said Vodafone Idea’s in a press release.

Network Capex

Airtel mentioned in their press note that it had "rolled out an additional ~8k towers in the quarter to optimally augment our coverage and provide differentiated network experience."

The telco spent 52.88 billion rupees (US$660 million) on capital expenses during the quarter.

Vodafone Idea spent INR8.4 billion ($100 million) as Capex during the first quarter of the financial year. Capital expenditure of all three service providers is likely to rise in the coming quarters as they prepare to launch 5G services.

Money talks

Reliance Jio claimed to have recorded the best-ever quarterly revenue for Jio Platforms at INR275.27 billion ($3.46 billion), up by 23.6% year-on-year.

Its standalone net profit grew by INR43.35 billion ($545.26 million) for the quarter ending June 30, 2022, while it reported a profit of INR35.01 billion ($440.3 million) over the same period last year.

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For Airtel, consolidated profit increased by 466% to touch INR16.07 billion ($202.1 million) for the quarter, up from INR28.4 billion ($357.2 million) in the corresponding period last year. Its revenue grew by 22% to INR32.8 billion ($413 million) on the back of an increase in ARPU and growing consumption of data and the number of subscribers.

Vodafone Idea, as expected, is the only private service provider to have reported a loss – INR72.97 billion ($917 million) compared to INR73.19 million ($920 million) in the corresponding period in the last financial year.

While Vodafone Idea added new subscribers and has recorded an increase in ARPU, the massive debt ensures that it continues to record losses.

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— Gagandeep Kaur, contributing editor, special to Light Reading