It was widely expected that Q4-FY'17 will produce the worst Revenue numbers for all telecom operators as Reliance Jio had extended it's Freebie offer till 31st March'17. Reliance Jio started adding subscribers on it's 4G-LTE networks in a big way from latter half of Q2-FY'17. Hence Q1-FY'17 numbers will become the benchmark for pre-Jio era. The Top-8 operators (Airtel, Vodafone, Idea, BSNL/MTNL, Tata Tele, Aircel, RCom & Telenor) together generated Adjusted Gross Revenues (AGR) of Rs.40,089 crores in Q1-FY'17. From that point onwards, the Industry AGR numbers have been on a downward trend in each of the next 3 Quarters so far, reaching a number of Rs. 33,149 crores in Q4-FY'17. That means Reliance Jio has managed to pull down the Industry's Quarterly AGR by nearly Rs.7,000 crores or about 17.5%, over the last 3 Quarters.
How did Reliance Jio manage to make such a large impact even when it's Active Subscriber Base market share reached just about 8% by the end of March'17? That is because of 2 reasons: Firstly, these 8% subscribers shifted almost their entire Mobile (Voice as well as Data) usage to Reliance Jio from their Primary operator; Secondly, in an attempt to hold on to their precious customer base, the existing operators had to make big changes to their tariff plans and introduce many new offers to attract attention of existing as well as new subscribers. In fact many of the attractive offers from the Top-3 players (Airtel, Vodafone & Idea) were given only to new subscribers, which led to millions of existing mobile users buying new sim cards just to avail these special one-time offers. This boosted the subscriber numbers of these operators at a time when Reliance Jio was aggressively eating into their usage market share. Ofcourse most of these recently activated sim cards, purchased only to avail the special one-time offers, will soon be thrown away once the validity period of the offers expire.
Between Q1 and Q4-FY'17, all telecom operators (barring 2) have seen substantial double-digit percentage drops in their AGR numbers. The Top-3 percentage losers are: Aircel (31.5%), Tata Tele (28.4%) and Telenor (24.3%). Each of India's Top-2 telecom operators, Airtel & Vodafone, have seen their AGR shrink by 19.4% between Q1 and Q4 of FY'17. Idea Cellular too lost 17.9% of it's AGR, more than the Industry shrinkage of 17.5%. Surprisingly, two operators managed to buck the AGR shrinking trend: RCom and BSNL, but their stories are different. RCom's Q1-FY'17 AGR number of Rs.1274 crores was already lower by 33% compared to it's year ago number of Rs.1864 crores. It dropped another 25% to report a number of just Rs.968 crores in Q3-FY'17. But the company has managed to pull it back smartly to Rs.1270 crores in Q4-FY'17. Could this pull back be a result of it's association with Reliance Jio for 4G-LTE services? This will only be confirmed if RCom manages to maintain this number or improve further in Q1-FY'18. Coming to BSNL/MTNL, the PSU combine has managed to post a 7.6% increase in it's AGR numbers between Q1 and Q4 of FY'17, which is really a surprising performance. Even it's Q2 and Q3 numbers were quite stable and Q4 number has been an improvement on both. The charts above clearly show how Public Sector combine of BSNL/MTNL managed to maintain it's Quarterly AGR numbers throughout the 3 Quarters of Reliance Jio onslaught, even when none of the Private Sector players could not save themselves from 17% to 31% erosion in AGR numbers over the 3 quarters.
BSNL/MTNL have managed this strong performance even without 4G-LTE service offering. It just did the basics right. Firstly, the operator worked on improving it's 3G networks at various important urban locations. Secondly, it worked on reducing the monthly Wireline surrenders and managed to report an increase in Wireline customer base in March'17. If this trend continues, it will give further push/stability to BSNL/MTNL's AGR numbers in coming quarters. Thirdly, BSNL/MTNL surprisingly made some very swift moves to introduce new Data Plans for both 3G as well as Wireline Broadband services and marketed the same over various mediums, both at local level as well as National level. This seems to be working for the company. If BSNL continues to strengthen it's 3G network in semi-urban and rural areas as well, then it could certainly prove to be a strong challenger to Reliance Jio and the Trio of Airtel-Vodafone-Idea. With Reliance Jio finally making it's service chargeable during the current quarter of Q1-FY'18, it will be very interesting to see how the numbers pan out for different operators over the next few quarters.
BSNL/MTNL have managed this strong performance even without 4G-LTE service offering. It just did the basics right. Firstly, the operator worked on improving it's 3G networks at various important urban locations. Secondly, it worked on reducing the monthly Wireline surrenders and managed to report an increase in Wireline customer base in March'17. If this trend continues, it will give further push/stability to BSNL/MTNL's AGR numbers in coming quarters. Thirdly, BSNL/MTNL surprisingly made some very swift moves to introduce new Data Plans for both 3G as well as Wireline Broadband services and marketed the same over various mediums, both at local level as well as National level. This seems to be working for the company. If BSNL continues to strengthen it's 3G network in semi-urban and rural areas as well, then it could certainly prove to be a strong challenger to Reliance Jio and the Trio of Airtel-Vodafone-Idea. With Reliance Jio finally making it's service chargeable during the current quarter of Q1-FY'18, it will be very interesting to see how the numbers pan out for different operators over the next few quarters.
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