Wed, 23 Sep 2020

Singapore, Aug 7 (ANI): Indian telecom operators reported strong revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA) growth in the three months ending June (Q1 FY21) due to tariff growth and higher data usage, defying the economic slowdown from the countrywide lockdown of 68 days up to May-end.

According to Fitch Ratings, revenue market share continues to consolidate with market leader Reliance Jio and Bharti Airtel as the third-largest telco Vodafone Idea is losing 10 million to 15 million users per quarter.

"Indian telcos are likely to weather the coronavirus-led slowdown as we forecast the industry mobile segment's EBITDA to grow by 25 to 30 per cent year-on-year (FY20: 25 per cent) despite expectations for Indian GDP to contract by 5 per cent during this period," said Fitch.

Robust growth will be driven by sustained higher tariffs, feature-phone user migration to 4G and high monthly data usage of 12 to 16 GB per user, one of the highest globally.

Data traffic surged by 20 to 30 per cent as the lockdown increased demand for data connectivity and remote access which more than offset the slower migration of feature-phone users to 4G as smartphones sales declined by 48 per cent in Q1 FY21.

Jio's revenue and EBITDA grew by 34 per cent and 55 per cent respectively while Bharti reported Q1 FY21 Indian mobile revenue and EBITDA growth of 19 per cent and 35 per cent year-on-year.

Bharti reported a 21 per cent rise in monthly average revenue per user (ARPU) to Rs 157 as Jio reported 8% growth to Rs 140. Jio was boosted by 67 million net subscriber additions year-on-year to 398 million while Bharti was flat at 280 million.

"We expect industry ARPU to grow by around 5 to 10 per cent in FY21 as users upgrade gradually to higher-tariff 4G price plans. We estimate 250 million to 300 million users still use 2G technology," said Fitch.

Bharti's ARPU was highest in the last 12 quarters, driven by a 45 per cent growth in 4G customers to 138 million, 40 per cent growth in monthly data usage per user to 16.6 GB and a 12 per cent increase in voice usage to 994 minutes.

However, 4G net subscriber additions grew by only 1 per cent quarter-on-quarter due to lower smartphone sales. Bharti believes industry monthly ARPU needs to grow to around Rs 200 and eventually to Rs 300 for a sustainable business model.

But Vodafone Idea has lost about 144 million subscribers in two years and is struggling to service debt due to EBITDA generation insufficient to cover interest costs. Its subscriber base is shrinking due to its deteriorating network on limited capex. (ANI)

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