Telecom Sector Sees Rise In ARPU, Users In Q3. For Vi, It Only Masks Troubles
Vodafone Idea Ltd. continues to struggle because of its liabilities even as India’s telecom operators saw their revenue and operating income rise in the third quarter, aided by better ARPU and subscriber additions amid work from home.
The aggregate revenue and earnings before interest, tax, depreciation and amortisation of the three carriers—Bharti Airtel Ltd., Vodafone Idea Ltd. and Reliance Jio Infocomm Ltd.—rose 4.8% and 7.6% sequentially, respectively, in the quarter ended December, according to data compiled from exchange filings. Year-on-year, the cumulative revenue and Ebitda increased 20.5% and 37.8%.
Their average operating margin rose to 42.89% in the reported quarter from 41.85% in the July-September period.
The performance comes amid intense competition and even as they repay pending statutory levies worth thousands of crores.
Here’s how each of these telecom service providers fared in the third quarter…
- Reported the highest-ever consolidated revenue at Rs 26,518 crore.
- Posted a profit of Rs 763 crore, the first in six quarters, helped by one-time gain stemming from the merger of its tower arm and Indus Towers Ltd.
- Growth in India mobile and Airtel Africa business lifted operating income.
- 4G user additions and plan upgrades by existing customers (2G and 4G) aided average revenue per user.
- The company added 1.29 crore 4G customers in the third quarter and the highest ever 2.15 lakh users in home business
- Bharti Airtel’s India mobile business grew 6.8% quarter-on-quarter despite no price hikes
- Its Africa business revenue and net profit rose 7.2% and 31.8% sequentially, respectively
- The Africa customer base grew 2.14% over the preceding three months to 11.89 crore
“The company’s strategy of deep presence across business-to-business, homes and DTH, alongside wireless operations will help drive a 23% consolidated Ebitda CAGR over 2019-20 and 2022-23,” Ambit Capital said in a note. Also, increased investments in non-wireless business are to capitalise on digitisation/work from home trends and are at the cusp of growth, the brokerage said.
- Profit after tax rose 16% sequentially, aided by lower interest costs.
- ARPU rose to Rs 151 in the third quarter from Rs 145 in July-September period.
- The company added 2.51 crore customers on a gross level and a net 52 lakh subscribers in the third quarter.
- The net subscriber addition, however, was the lowest ever in a quarter. That was because of an increase in churn rate to more than 1.5% in the last two quarters.
“Jio continues to get delayed benefits of the 14-53% tariff hikes it took in December 2019, with its ARPUs growing 18% since pre-tariff hike levels,” Jefferies said in a report.
Credit Suisse expects Reliance Jio to launch an affordable smartphone over the next few quarters. Such affordable smartphones, the research firm said in a report, could accelerate the market share gains for the company.
Vodafone Idea (Vi)
- The company suffered a loss for the tenth straight quarter. It’s the only one among peers to post a loss in the reported period.
- The consolidated loss, however, narrowed to Rs 4,532 crore from Rs 7,218 crore in the second quarter, helped by a one-time gain from its stake sale in Indus Towers.
- Its ARPU rose to Rs 121 from Rs 119 in the quarter ended September
- Its total subscriber base stood at 26.98 crore.
- Gross subscribers reduced by 20 lakh in the reported quarter compared with a decline of 80 lakh in the preceding three months
- Improved 4G network has helped the company to retain subscribers
According to CLSA, Vi gained 40 lakh 4G subscribers to 11 crore and data traffic was up 3% quarter-on-quarter. While 30 lakh data subscribers were upgraded from 3G, total data subscribers only increased marginally to 13.76 crore, it said in a report. Its voice traffic, too, declined 1% sequentially.
Vi’s performance, the research firm said, is “unsatisfactory and the company is reeling under enormous debt led by spectrum payment liabilities at Rs 11,710 crore”.
Goldman Sachs said Vi may face a capital shortfall of Rs 20,000 crore between December 2021 and April 2022 and a rise in ARPUs can only be gradual, therefore the process of increasing tariffs would need to start in the immediate future.