Telecom Analysis - Performance of operators in different Circle-Categories.

Indian geographical territory is distributed in 22 different Telecom Circles. And these 22 Circles are then Categorised in 4 sections: Metro Circles, Category-A, B & C circles, depending on their Revenues generating potential. Even the Spectrum Auctions have seen much higher bids for Metro & Category-A circles, compared to Category-B or C circles. Hence it is very interesting to see how different telecom operators are performing in different Circle-Categories.

I have considered Gross Revenue numbers for Top-8 operators only as these operators constitute about 99% of the Industry's Revenues. No.1 being Airtel and No.8 being Telenor. Operators that have been ignored include Jio, MTS, Videocon & Quadrant. Jio is yet to report any noticeable revenues. MTS is on the verge of getting merged with RCom & Videocon has shut down it's operations in most circles recently.

Even though Telenor is the smallest operator amongst the 8 operators I have considered for this analysis, it is small only because of it's 6-circles operation. All other operators have a presence in all 22 circles, excluding Aircel (20 circles) and Tata Tele (19 circles). Telenor commands just 2.3% of Industry's Gross Revenues, but it has managed to be amongst the Top-4 operators in 3 out of it's 6 circles of operation. Telenor commands a very respectable 9.1% market share in circles of UP (E) and UP (W), despite being the last entrant in these circles.

Coming back to Circle-Categories, following is the distribution of the 22 circles in the 4 different Categories:

Metro Circles - Delhi, Mumbai & Kolkata. (Chennai's numbers are included in Tamil Nadu's numbers).

Category-A Circles - Andhra Pradesh, Gujarat, Karnataka, Maharashtra & Tamil Nadu.

Category-B Circles - Haryana, Kerala, Madhya Pradesh, Punjab, Rajasthan, UP (E), UP (W) & West Bengal.

Category-C Circles - Assam, Bihar, Himachal Pradesh, North-East & Orissa.

The Metro Circles contributed 18% of Telecom Industry's Gross Revenues for the March'16 quarter, with Delhi circle being the largest contributor & Kolkata being the smallest contributor. The Metro Circles reported a 7.9% Y-o-Y Growth in Gross Revenues for March'16 quarter. This is the fastest growth reported amongst all 4 Circle-Categories. The strongest growth was reported by MTNL, which posted an unusual & surprise jump in Gross Revenues for March'16 quarter. Whether this was a fluke or not will be known once the June'16 quarter numbers are declared. Apart from MTNL, Airtel was the next fastest with 10.7% Growth. This helped Airtel to increase it's market share in Metro Circles to 27.2% and inch closer to the leader Vodafone, which itself reported a disappointing growth of just 2.8%. Vodafone's market share in Metro Circles dropped by over 1% & now stands at 28.5%. Vodafone has recently launched it's Supernet 4G service in all the 3 Metro circles as a step to protect it's market share. Idea Cellular managed to post Industry-matching growth of 7.9% and maintained it's market share at 10%. Idea has launched it's own 3G network on the recently acquired 900 MHz band in Delhi circle late in 2015 and will now hope to grab some more market share there. Tata Tele lost almost 8% revenues in the Metro Circles, primarily because of lack of 3G/4G service offering. It doesn't even have a GSM service offering in Delhi circle. Tata Tele's CDMA-based photon high-speed service is losing steam in front of strong competition from 3G & 4G networks. Tata Tele has acquired some liberated 850 MHz spectrum last year for Delhi & Mumbai, which can be used for 4G service. But Tata Tele's strategy is still unknown on this front. RCom is the biggest disappointment here. Despite winning a 3G license for both Mumbai & Delhi in the first auctions and shelling out thousands of crores for it, RCom's performance has been extremely dismal. In the March'16 quarter it lost another 2.8% of it's revenues and pulled down it's already-low market share even lower now. Aircel has managed to post a not-so-bad 4.7% growth in revenues in the Metro Circles, possibly partly because of it's 3G-roaming tie-up with RCom.

The Category-A circles contributed the largest chunk of Industry's revenues with 37.5% contribution. It's Y-o-Y Growth for March'16 quarter was a little slower than Metro Circles at 6.6%. An interesting fact is that the Maharashtra&Goa circle (excluding Mumbai) generates more revenue than even Delhi circle. And Tamil Nadu, Karnataka & Andhra Pradesh circles generate more revenues than Mumbai circle, but less than Delhi circle. Airtel is again the biggest gainer here with 10.8% growth, improving it's market share by over 1% to reach 30.9%. Idea was the next biggest gainer with 10.3% growth, taking it's market share to 18.8%. Vodafone still holds No.2 position despite a drop in market share to 20.9% on the back of much slower growth of just 2.9%. With both Airtel & Idea aggressively launching their 4G services in most of these Category-A circles, Vodafone's market share is expected to come under further pressure in coming quarters. BSNL was the next biggest gainer with a smart 8.3% growth, followed by Telenor with a near similar 8.2% growth. Aircel & Tata Tele managed near 1% growth only and saw their market shares erode by a small extent. Here as well RCom saw it's revenues drop by 5% and it now commands less than 4% market share in Category-A circles. Alongwith the Metro circles, the Category-A circles are expected to lead the adoption of 3G & 4G services in the coming quarters. Hence operators with ability to offer good quality 3G & 4G service will certainly gain further ground in these circles.

The Category-B circles generate the 2nd biggest contribution to Industry's revenues with nearly 33% contribution. But with a Y-o-Y growth of 4.5% in March'16 quarter, it is slower than Metro & Category-A circles. The biggest gainer (by a large margin) here is Idea Cellular with 12.6% growth. This has propelled Idea's market share by almost 2% to touch a figure of 26%. Idea is now within 1% of leader Airtel's market share number. Airtel too has managed to increase it's market share to 26.9% on the back of 6.7% growth in revenues. Vodafone is at No.3 and has managed to maintain it's 22.6% market share with a Category-matching 4.4% growth. Both Aircel & Telenor too managed to maintain their market shares at little under 3%, with a near 5% growth in revenues. Tata Tele reported a 1.6% drop in revenues, followed by BSNL, which reported a 6.9% drop in revenues and followed by RCom, which posted a whopping 14.6% drop in revenues. All three of them saw their market shares decline by varying degrees depending on their revenue loss.

Coming to the smallest Category-C circles, which contributed just about 11.6% of Industry's revenues in March'16 quarter. This category too posted just 4.5% growth in revenues. Here the No.1 player is again Airtel, but the strange part is that it's market share of 43.4% is nearly 3 times that of the No.2 player Vodafone's market share of 15.5%. Airtel reported a revenue growth of 8.4% here, which helped it expand it's market share by 1.5% since March'15. Vodafone was the fastest growing operator in these circles with a growth of almost 23%. It improved it's market share by over 2% over the last one year. Idea too reported a very strong growth of 22%, thus improving it's market share to almost 10% now, but is still the No.4 player here. Aircel is No.3 in this category with 12.4% market share, but it's growth rate was slower at 7.4%. BSNL comes next with 8.5% market share, but has lost about 8% of it's revenues. Tata Tele is the smallest operator here with limited presence in Category-C circles. Tata Tele's market share is now even lesser than that of Telenor. While Tata Tele lost 10.5% of it's revenues, Telenor gained 6.1% compared to last year, thus handing over the last position tag to Tata Tele. RCom lost a whopping 43% of it's revenues compared to last year, mainly because of non-renewal of it's 900 MHz spectrum in many Category-C circles.

Summary: 

Idea Cellular has managed to post strong double-digit growth in 3 Categories, excluding the Metro Category. With decent 3G & 4G spectrum portfolio in Category-A & B Circles, Idea Cellular will try to maintain this level of performance in coming quarters. While it will bank on it's strong Brand image & improving coverage to garner more of 2G voice market share in Category-C circles. Airtel has done a decent job everywhere with better than Industry growth in all Circle-Categories. With a super strong spectrum portfolio comprising of 3G & 4G capable frequencies, Airtel's further performance will purely depend on it's network rollout pace & quality of service. Vodafone is clearly the worst performers amongst the incumbents with lower than Industry growth in Top-3 Circle-Categories. Vodafone needs to spend a lot more in the upcoming spectrum auctions to boost it's 3G/4G spectrum portfolio. Vodafone is already on the verge of losing it's No.1 position in Metro circles & No.2 position in Category-A circles. Looking at BSNL's performance, it seems like in the initial phase of it's business revival plans, it is focusing on Category-A circles. It has managed a healthy growth only in this category, while it has reported a decline in the other two categories. Amongst the remaining players, it is only Aircel & Telenor who have managed to post some growth in revenues in all categories they are present in. Aircel is in talks to combine it's operations with RCom's wireless business unit. The only benefit from this combination is larger scale of operations. But RCom is a seriously struggling business unit. Don't know if Aircel will benefit from this merger or not. Telenor too is experiencing sluggishness in it's growth, possibly due to lack of 3G/4G service offerings. It's narrow-band 4G experiment, if successful, might get rolled out across several cities & towns in it's circles of operation in the near future. With it Telenor is able to offer 3G-like speeds at very attractive price points. But sooner rather than later Telenor will need more spectrum to be able to handle more traffic. Hence it might need to get active in the upcoming spectrum auctions.