The Indian Telecom sector was finally hit with Reliance Jio Tsunami in the last week of August'16, when the company started offering Preview Offer Sim cards to almost all 4G handsets available in the market. It was soon followed with launch of Jio Welcome Offer, which was advertised widely by the company through various mediums. Millions of people with 4G smartphones started queuing up for getting a Reliance Jio Sim card, primarily because of the offer for Free usage till 31st December'16. An additional few million people preponed their handset upgrade plan just to be able to enjoy the Jio Welcome Offer for a few months. All this lead to Reliance Jio registering a user base of close to 16 million by the end of September'16, probably the highest single-month subscriber addition by a single operator in the history of Indian Telecom sector. Ofcourse the attraction of Freebies pulled in so many users. But this sudden shift in usage of nearly 2% of India's mobile populace was bound to start reflecting on the numbers of all existing operators. The impact during September'16 quarter was expected to be small, but still noticeable. The impact will be much bigger during the December'16 quarter as Reliance Jio's userbase had swelled to over 50 million by end of November'16 and expected to hit about 60 million by end of December'16.
In my analysis for this report, I have focused on a few limited parameters. Firstly I have considered the AGR & VLR-subscriber numbers for only the Top-5 operators (excluding Jio). They are:
1) Bharti Airtel
2) Vodafone India
3) Idea Cellular
4) BSNL/MTNL
5) Tata Teleservices ....... (even though Tata Tele is smaller than RCom & Aircel in terms of subscriber numbers, it leads the other two in Adjusted Gross Revenue (AGR) terms by a considerable margin.)
Secondly, I have selected the Top-5 AGR contributing Circles for each respective operator and then studied the VLR-subscribers addition pattern for those Circles. [ The VLR subscribers number announced by each operator every month represents the Highest number of users active on it's network for that Circle in that month. It need not be true for every day of that month. Hence a change in VLR base will only give us a slight hint of things to expect in the following months. ]
In my analysis for this report, I have focused on a few limited parameters. Firstly I have considered the AGR & VLR-subscriber numbers for only the Top-5 operators (excluding Jio). They are:
1) Bharti Airtel
2) Vodafone India
3) Idea Cellular
4) BSNL/MTNL
5) Tata Teleservices ....... (even though Tata Tele is smaller than RCom & Aircel in terms of subscriber numbers, it leads the other two in Adjusted Gross Revenue (AGR) terms by a considerable margin.)
Secondly, I have selected the Top-5 AGR contributing Circles for each respective operator and then studied the VLR-subscribers addition pattern for those Circles. [ The VLR subscribers number announced by each operator every month represents the Highest number of users active on it's network for that Circle in that month. It need not be true for every day of that month. Hence a change in VLR base will only give us a slight hint of things to expect in the following months. ]
 |
| Numbers in '000s |
1) Bharti Airtel: India's No.1 Telecom operator has over 251 million VLR subscribers and quarterly AGR of around Rs.12,500 crores. Bharti Airtel commands about 32% AGR market share as of September'16 and about 26% subscribers market share. The Top-5 AGR contributing Circles for Bharti Airtel are: (not in any order) Andhra Pradesh, Bihar, Delhi, Karnataka and Tamil Nadu. These 5 Circles together contribute 49.8 % of the company's Nationwide AGR and hence their performance becomes even more important for the company. The combined AGR for these circles reported a 1.9% Q-o-Q drop during September'16 quarter, with Bihar being the main culprit reporting a near 9% drop in AGR. The VLR base of these Top-5 Circles form just over 40% of the company's All-India VLR base. Now have a look at the chart alongside which shows the company's monthly VLR subscribers addition since June'16. After adding 4.3 lakh & 17.5 lakh VLR subscribers during June'16 & July'16, Bharti Airtel has seen an erosion of 2 lakh & 3.2 lakh VLR subscribers during the following 2 months. The two main competitors that Airtel needs to be wary about in it's Top-5 Circles are Idea Cellular & BSNL with each of them gaining some ground in atleast 3 of them. Amongst Airtel's Top-5 circles, Idea Cellular was super-aggressive with 4G expansion in Andhra Pradesh, Karnataka & Tamil Nadu.
 |
| Numbers in '000s |
2) Vodafone India: India's No.2 Telecom operator has little over 190 million VLR subscribers and little under Rs.8800 crores in quarterly AGR, making it nearly 30% smaller than the No.1 operator. The Top-5 AGR contributing Circles for Vodafone India are: (not in any order) Delhi, Gujarat, Maharashtra, Mumbai & Tamil Nadu. These 5 Circles together contribute close to 48% of Vodafone India's Nationwide AGR. The combined AGR of these Circles reported a 2.5% Q-o-Q drop during September'16 quarter, with Gujarat & Maharashtra circles being the lead losers reporting nearly 6% drop in AGRs.. The VLR base for these 5 Circles constitutes little over 37% of Vodafone's All-India VLR base. In these 5 Circles, Vodafone had seen it's VLR base increase by 6 lakhs in June'16, 4 lakhs in July'16 and over 10 lakhs in August'16, but the net addition in September'16 was barely 35,000 subscribers. The primary reason for dismal VLR addition in September'16 for Vodafone was a VLR loss of nearly 5 lakh subscribers in Delhi Circle alone. Healthy additions in Maharashtra and Tamil Nadu Circles helped avoid the Net Addition number from dipping into the red. Vodafone has fortified it's 4G-capable spectrum holdings in many of it's crucial circles in the recent auctions. It certainly needs to act fast though. Over the recent couple of months, it has been seen that Vodafone India is the slowest amongst the Top-3 operators in introducing changes to it's tariff plans, both on prepaid as well as postpaid. I think it needs to be more agile on this front too.
 |
| Numbers in '000s |
3) Idea Cellular: India's No.3 Telecom operator has little over 186 million VLR subscribers and about Rs.7300 crores in quarterly AGR. Compared to Vodafone India, Idea Cellular's VLR base is less by only about 2%, but it's AGR is less by about 15%. This clearly suggests that rural subscribers comprise a higher proportion of Idea Cellular's VLR base, compared to Vodafone India. The Top-5 AGR contributing Circles for Idea Cellular are: Andhra Pradesh, Kerala, Madhya Pradesh, Maharashtra and UP (West). These 5 Circles together contribute nearly 59% of Idea Cellular's All-India AGR, making the company even more sensitive to performance of these circles. The combined AGR of these 5 circles reported a 5.7% Q-o-Q drop in the latest quarter, with Madhya Pradesh reporting nearly 10% drop & Maharashtra reporting nearly 8% drop in AGRs. One look at the chart alongside & it is obvious that Idea Cellular is the only one amongst the leading trio to have maintained a healthy VLR addition rate every month over the recent 4 months. Idea Cellular has added about 4.8 lakh VLR subscribers every month on an average, with the lowest monthly number being 1.7 lakhs in August'16. Idea Cellular has clearly done better on VLR additions front in the month of September'16, when compared to both Bharti Airtel & Vodafone India. If this trend continues in following months, it should help Idea Cellular regain the ground it lost to it's larger peers on the AGR front. The VLR numbers for the Top-5 Circles constitute a little over 49% of Idea Cellular's All-India VLR base.
 |
| Numbers in '000s |
4) BSNL / MTNL: The once-upon-a-time PSU behemoth is now a distant No.4 in the Indian Telecom space with barely 10% AGR market share, which is less than a third of the No.1 player and just about half of the No.3 player. It is only in the last couple of years that BSNL/MTNL combine has shown a few signs of making an attempt to arrest it's continuous decline. The companies are finally trying to upgrade their network infrastructure in several cities to be able to offer better coverage & services. The Top-5 AGR contributing Circles for BSNL/MTNL combine are: Karnataka, Kerala, Maharashtra, Mumbai & Tamil Nadu. These 5 Circles together contribute about 44.5% of the combine's Nationwide AGR. BSNL/MTNL has seen it's AGR for these 5 circles jump by over 8% Q-o-Q, making it the only operator to have reported a Q-o-Q growth during September'16 quarter. BSNL/MTNL have been reporting wild Q-o-Q fluctuations sometimes in previous quarters. Hence it will be worthwhile to wait & see it the combine manages to build upon this growth in the following quarter. The VLR additions chart for BSNL/MTNL combine too is very strange. The combine saw a huge surge in VLR numbers during August'16 with an increase of over 24 lakhs in just the Top-5 circles and around 83 lakhs Nationwide. It seemed as if millions of dormant BSNL sim cards suddenly were put into use by their holders. And the combine added another 2.9 lakh VLR users in September'16. If the VLR additions number for BSNL does not turn negative in the following 1 or 2 months, then the combine should be able to post another healthy growth in it's AGR during December'16 quarter.
5) Tata Teleservices: The performance of Tata Teleservices has been rather surprising over the recent quarters. From the media reports we gather that the Tata Group is not too serious about continuing with it's Telecom venture for long & is looking to find a buyer or partner since the last couple of years. It's Japanese partner too is looking to exit. In such a scenario one would have expected the company's performance to gradually dwindle. But surprisingly it has been quite steady, especially in a few important circles. The company even went ahead and purchased Band-3 Spectrum for Mumbai, Maharashtra & Andhra Pradesh Circles in the recent auctions. It is still unknown on what it plans on doing with it: continue offering 2G service or use it for 4G-LTE service.
 |
| Numbers in '000s |
Tata Tele currently offers it's 2G GSM & CDMA service in 19 circles. But it has very very limited presence in 7 of those 19 circles. The company also offers 3G service in 8 circles, but with only 5 of these circles doing reasonably well. On an All-India basis, Tata Tele commands just 6.5% AGR market share. It's Top-5 AGR contributing Circles are: Andhra Pradesh, Karnataka, Maharashtra, Mumbai and Tamil Nadu. These 5 circles now contribute about 55.5% of Tata Tele's Total AGR. The combined AGR of these 5 circles reported a drop of only 1.8% Q-o-Q during latest quarter, a drop which is smaller than that reported by Bharti Airtel, Vodafone as well as Idea Cellular. The combined VLR base for these 5 circles constitutes a little under 46% of Tata Tele's Total VLR base. After having added 4.3 lakh VLR subscribers in June & July'16, Tata Tele has lost 2.61 lakh VLR subscribers in the following 2 months. The drop in VLR base for Tata Tele could be due to 2 factors: Increased competition and possible winding down of CDMA operations in a few circles. The company's exact plans on discontinuing it's CDMA operations in few or all circles is yet unknown. Hopefully this increased competitive intensity & expected pressure on cash flows will push to company into taking concrete steps towards merger/sell out or curtailing operations to a few strong circles only.
No comments:
Post a Comment