In Charts: How The Pandemic Is Changing India's Telecom Sector

While the data comes with a lag, it underscores higher data consumption in the world's second-largest telecom market. More so during the pandemic that has accelerated digital shift as consumers seek everything online.

Consumers Spend More

Consumer spend on telecom services rose 2.6% quarter-on-quarter to Rs 39,969.4 crore in the quarter ended March, ICICI Securities said in a report citing the telecom regulator’s data. The pace of growth, however, fell sequentially.

The share of data in consumer spending rose from 73.8% in the quarter ended March 2020 to 78.7% in the three months through March 2021. This corresponds with a decline in spending on voice and other services like SMSs during the period.

Costlier Plans Boost Revenue

The industry added 2.39 crore prepaid subscribers and 33 lakh post-paid subscribers in the quarter ended March.

The all-India blended average revenue per user, including prepaid and postpaid plans, rose 1.9% sequentially to Rs 103.58 in the three months ended March, according to the report by the Telecom Regulatory Authority of India.

That can be partly attributed to tariff hikes by operators like Vodafone Idea Ltd., which increased rates for two of its post-paid plans by Rs 50 in December 2020.

• Prepaid revenue increased 3.2% sequentially to Rs 32,419 crore in January-March. The segment’s ARPU increased 2.1% to Rs 97.

• Post-paid revenue rose sequentially 4.7% but dropped 0.6% year-on-year to Rs 3,859 crore. Average revenue for the segment fell 0.4% quarter-on-quarter to Rs 226.

Both prepaid and post-paid ARPU may get a boost in the quarter ending September because of indirect tariff hikes by Bharti Airtel Ltd. The operator increased the price of entry-level prepaid plans and postpaid plans by 61.2% and 20-50% in July, respectively. Vodafone Idea, too, tweaked its post-paid plans during the month.

Hungry For Data

Total data subscribers across plans rose 3.9% quarter-on-quarter to 79.9 crore as on March. The net addition of 2.97 crore was the highest in nearly five quarters.

The industry’s 4G data subscribers, accounting for 91.2% of total data users, rose 4.5% sequentially to 72.9 crore as on March 2021, according to the ICICI Securities report.

Bharti Airtel managed to increase its 4G data subscriber base by 310 basis points quarter-on-quarter to 24.6%, Reliance Jio’s share stands at 58%—the highest among peers.

The 3G data subscriber count fell 4.5% sequentially as Bharti Airtel and Vodafone Idea plan to discontinue its services in all 22 telecom circles to cut costs and are refarming their 3G spectrum into 4G.

India, however, still has 30 crore 2G subscribers who largely use cheaper feature phones. And operators are targeting to convert such users. Reliance Jio's new low-cost JioPhone Next smartphone is aimed as such consumers.

The elimination of the interconnect usage charges will push incumbent operators having 2G/3G operations to migrate to a 4G-only network to reduce operating costs, Crisil Ratings said in a report in April. It also said telecom firms are well-positioned to handle any surge in data traffic, after spectrum acquisition. CLSA expects 4G mobile data penetration to rise 17 percentage points to 81% by FY23.

Tariff War Reaches Broadband

The industry’s fixed broadband subscribers rose 2.1% sequentially to 2.23 crore in the quarter ended March.

A price war since September 2020 helped when tariffs were slashed by over 40%. Reliance Jio cut the price of its entry-level broadband plan to Rs 399 per month, with Bharti Airtel responding by bringing its entry-level schemes to Rs 499.

• Bharti Airtel’s market share in the segment rose by one percentage point over the preceding quarter to 13.6% in the three months ended March.

• Reliance Jio’s share jumped over 2 percentage points quarter-on-quarter to 11.4%.

• BSNL’s share fell by around 4.5 percentage points over the preceding quarter.