Ind-Ra: Telecom Connect: Sector At a Glance
India Ratings and Research's (Ind-Ra) report on India's telecom sector highlights the trends in the telecom sector with a focus on subscriber additions, subscriber market share, circle wise additions, broadband subscribers, data usage and pricing.The key highlights of the report include update on 2QFY18 results of Reliance Jio Infocomm Limited (RJio; IND AAA/Stable) wherein the company has reported a positive EBITDA of INR14.4 billion and an average revenue per user (ARPU) of INR156, which is way above the average industry ARPU of INR83 in 1QFY18, and is comparable with ARPU of Bharti Airtel Limited (Bharti) at INR154 for 1QFY18. RJio ARPU for 1QFY18 is INR156, which is significantly higher than the industry ARPU of INR83 in the quarter ending June 2017. During the same quarter, the average ARPU for top telcos declined by up to 20% across top circles.
RJio has been able to maintain momentum in subscriber acquisition on a monthly basis, garnering 10.8% subscriber market share by August 2017. RJio's data consumption per user is 10GB, is well above the industry average. This indicates the structural shift in data consumption habits which are likely to pull the average industry up. Broadband proliferation is also increasing while number of narrowband subscribers is decreasing qoq.
Subscriber growth turned negative in July 2017 reflecting industry churn, high urban tele density and possibly the beginning of reversal of dual-sim phenomenon. RJio gained 10.8% subscriber market share between September 2016 and July 2017. Top three telcos lost 4.2% subscriber market share on combined basis and rest of the players lost 6.6%.
The consolidation has accelerated in the last 12-15 months with Telenor India (Communications) Private Limited merging with Bharti Airtel Limited, while Idea Cellular Limited and Vodafone India Limited merging with each other. However, future of Reliance Communications Limited with Aircel Limited is uncertain due to rejection of their merger due to regulatory/legal reasons. Tata Teleservices Limited/Tata Teleservices (Maharashtra) Limited (TTML - 'IND A'/RWE) - Bharti Airtel Limited deal was inevitable, as the wherewithal to survive was diminishing for smaller telcos ever since RJio entered the telecom landscape. The exit of smaller telcos is good for industry structure in the long-term but painful for the stakeholders including lenders.
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