The Reliance Jio Effect: Telecom Industry Revenue Falls
Jio’s free services hurts the overall telecom industry’s revenue.
The entry of the aggressive new rival Reliance Jio Infocomm Ltd. has brought down the combined revenue of the incumbent telecom operators.
The telecom industry’s combined revenue fell 6.6 percent sequentially in three months ended December 2016, making it the first such fall over the seasonally weak July-September quarter.
The adjusted gross revenue for 11 telecom companies in the third quarter of financial year 2016-17 contracted to Rs 34,835 crore from Rs 37,302 crore in the previous three months, shows the latest data released by the Telecom Regulatory Authority of India (TRAI).
The industry numbers do not include Mukesh Ambani-led Reliance Jio as the company will start charging for its services only from April 1, 2017.
“Reliance Jio’s free voice and data services have impacted operators’ adjusted gross revenue,” said a report by brokerage ICICI Securities Ltd.
Bharti Airtel Ltd., the largest mobile carrier, saw its revenue market share fall the most, by half a percentage point to 33 percent in the third quarter, according to TRAI data.
Vodafone India Ltd. and Idea Cellular Ltd. managed to marginally increase their revenue market share to 23.8 percent and 20 percent, respectively.
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The two-state run telecom operators – Mahanagar Telecom Nigam Ltd. (MTNL) and Bharat Sanchar Nigam Ltd. (BSNL) – also made some marginal gains in revenue market share. Telenor India Ltd., which has been acquired by Airtel, too saw it revenue market share go up.
Overall, the adjusted gross revenue of the top three telecom companies in India – Bharti Airtel, Vodafone India and Idea Cellular – fell five to eight percent, compared to the last quarter.
Revenue Struggle
Bharti Enterprise Ltd. Chairman Sunil Bharti Mittal said the revenue growth for the global telecom industry has fallen to 3 percent, an unsustainable level for an industry which is very capital-intensive, in his March 1 speech at the World Mobile Congress in Barcelona.
You may as well put the money in the bank and get a decent return and go out and play golf, rather than spend $200 billion of hard capital expenditure you do.Sunil Bharti Mittal, Chairman, Bharti Enterprises