The Telecom Industry in India is experiencing a paradigm shift in it's priorities over the last 4-6 quarters. From a voice-led business model, all operators are now shifting to Data-led business model with most of the incremental CAPEX being used to augmenting capacity to handle higher & higher Data traffic. Operators have invested heavily in expanding their 3G coverage across Cities & even Small Towns and have multiplied their Server capacities over the last 18 months and they are continuing to do so. Internet usage via Mobiles as well as on Desktops/Laptops over Wireless networks is shooting through the roof. Not just the number of consumers using Internet is going up, even the average usage per customer is also increasing rapidly. And with rates remaining more or less stable in the recent months, the increased usage volumes are directly impacting the revenues of all Wireless telecom operators. With this the contribution of Data Revenues in each operators Total Revenues is increasing rapidly.
I have analysed results of Bharti Airtel & Idea Cellular, 2 of the Top-3 operators in India. Bharti Airtel had reported Mobile Service Revenues from India operations of about Rs.43,000 crores in the 12-months ending March'14. Data Revenues contributed Rs.4362 crores, i.e. about 10% of Total Revenues. At the end of December'14, Airtel's Total India Mobile Service revenues have jumped to about Rs.47,500 crores, while contribution of Data Revenues have jumped to Rs.6803 crores, i.e. over 14% of Total Revenues. That means nearly 60% of incremental growth in the company's revenues is coming from Data services. I think this proportion will increase further in the coming quarters. The story is similar in case of Idea Cellular. Data services contributed less than 9% of Idea's 12-months revenues at the end of March'14. The same has increased to 13% by the end of December'14. Both Bharti Airtel & Idea Cellular have seen their Data Revenues grow at a rate of 16-18% Q-o-Q over the recent quarters.
Look at the above chart. The Average Data Revenue per User (ADRPU) per month is increasing strongly over the recent quarters, clearly indicating that the average Data Consumption per user is increasing rapidly. At this rate the ADRPU will soon shoot past the Voice RPU of most operators. And I am sure this will boost Profitability of almost all operators in the coming quarters. In case of both Airtel & Idea, only about a fifth of their total customer base is using Data service currently. In the coming years, even this percentage will grow. And there will be a time when the total Voice usage might start dropping gradually once a substantial chunck of the user base shifts to using High-speed Data services on 3G & 4G networks.
Bharti Airtel's T-T-M Data Revenues have hit Rs.6800 crores mark by December'14. Assuming Airtel to hold about 20% market share, we can safely assume that combined Annual Data Revenues of the entire Industry must be close to Rs.35,000 crores, which is a very healthy number. Even if we assume the growth to slow down to an average Y-o-Y level of 50% for the next 2 years, the Annual Data Revenues size should be around the Rs.80,000 crores mark by December'16. By then Data Revenues should be over 30% of the combined Industry's revenues.
It will be very interesting to see who takes what percentage of the market share in the next 2 years. In the recent quarters, the trio of Airtel-Vodafone-Idea have been gaining market share mainly because they offer the widest 3G coverage across all states thanks to their Roaming agreements. But the threat of big competition looms large on all operators. Once RelJio starts offering it's 4G services, which should happen anytime in the next 2-3 months, most existing operators will start losing market share in the Data service business. But the question is at what rate? I am expecting RelJio to capture about 8-10% market share in the first 12 months of commercial launch of it's services across the country. And in 3 years time it could be around the 25% mark. The fight between the trio of Airtel-Vodafone-Idea and RelJio will be very very interesting. We should see Data tariffs fall considerably once RelJio starts it's 4G services. Let's wait & watch & have fun!!
I have analysed results of Bharti Airtel & Idea Cellular, 2 of the Top-3 operators in India. Bharti Airtel had reported Mobile Service Revenues from India operations of about Rs.43,000 crores in the 12-months ending March'14. Data Revenues contributed Rs.4362 crores, i.e. about 10% of Total Revenues. At the end of December'14, Airtel's Total India Mobile Service revenues have jumped to about Rs.47,500 crores, while contribution of Data Revenues have jumped to Rs.6803 crores, i.e. over 14% of Total Revenues. That means nearly 60% of incremental growth in the company's revenues is coming from Data services. I think this proportion will increase further in the coming quarters. The story is similar in case of Idea Cellular. Data services contributed less than 9% of Idea's 12-months revenues at the end of March'14. The same has increased to 13% by the end of December'14. Both Bharti Airtel & Idea Cellular have seen their Data Revenues grow at a rate of 16-18% Q-o-Q over the recent quarters.
Bharti Airtel's T-T-M Data Revenues have hit Rs.6800 crores mark by December'14. Assuming Airtel to hold about 20% market share, we can safely assume that combined Annual Data Revenues of the entire Industry must be close to Rs.35,000 crores, which is a very healthy number. Even if we assume the growth to slow down to an average Y-o-Y level of 50% for the next 2 years, the Annual Data Revenues size should be around the Rs.80,000 crores mark by December'16. By then Data Revenues should be over 30% of the combined Industry's revenues.
It will be very interesting to see who takes what percentage of the market share in the next 2 years. In the recent quarters, the trio of Airtel-Vodafone-Idea have been gaining market share mainly because they offer the widest 3G coverage across all states thanks to their Roaming agreements. But the threat of big competition looms large on all operators. Once RelJio starts offering it's 4G services, which should happen anytime in the next 2-3 months, most existing operators will start losing market share in the Data service business. But the question is at what rate? I am expecting RelJio to capture about 8-10% market share in the first 12 months of commercial launch of it's services across the country. And in 3 years time it could be around the 25% mark. The fight between the trio of Airtel-Vodafone-Idea and RelJio will be very very interesting. We should see Data tariffs fall considerably once RelJio starts it's 4G services. Let's wait & watch & have fun!!
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