Published on 11/01/2019 1:12:41 PM | Source: ICICI Securities Ltd

Telecom Sector - Post-paid continues to drag consumer spend - ICICI Sec

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Post-paid continues to drag consumer spend

In Q2FY19, consumer spends (post GST) dipped 5.3% QoQ to Rs282bn, lower than the 7.9% decline in Q1FY19. ARPU (based on consumer spend) fell 4.6% QoQ to Rs81. Net revenue based post-paid ARPU dipped just 2.6% QoQ to Rs299 and net revenue fell 6.3% QoQ to Rs43bn; net revenue for pre-paid category dipped 2.5% QoQ to Rs190bn. 4G subscriber-base grew 16.4% QoQ (54.7mn net add) to 388mn, and RJio’s 4G market share rose slightly to 65% aided partly by Jiophone.

The Telecom Regulatory Authority of India (Trai) released the sector’s performance indicator report for Q2FY19.


Consumer spend (post-GST) declined 5.3% QoQ to Rs282bn in Q2FY19. Increased competitive intensity in post-paid impacted consumer spends which started to decline from Q1FY19 after stabilising for three quarters. However, post-paid net revenue dip was just 6.3% QoQ to Rs43 in Q2FY19 (compared to 9.7% in Q1FY19). Net revenue from pre-paid subscribers dipped 2.5% QoQ to Rs190bn and some of it was due to seasonality.

Post-paid ARPU (based on net revenue) declined 2.6% QoQ to Rs299 while pre-paid ARPU fell 3.4% QoQ to Rs57.

Consumer spends (post-GST) fell 5.3% QoQ to Rs282bn in Q2FY19 however net revenue declined just 3.2% QoQ to Rs234bn on lower inter-company settlement perhaps on Vodafone and Idea merger. ARPU (based on consumer spend) shrunk 4.6% QoQ to Rs81 (Rs99 including GST).

Data rose 3.4% QoQ to Rs140bn (49.5% of consumer spend) after a 4.3% QoQ dip in Q1FY19. Outgoing voice revenue declined 14.1% QoQ to Rs129bn.


4G subscriber base grew 16.4% QoQ (54.7mn net add) to 388mn and RJio’s 4G subscriber market share slightly rose to 65% (up 40bps QoQ) while other operators’ combined share was 35.0%. The number of 2G data subscribers rose 13.2mn while 3G subscribers fell 20.6mn QoQ. In mobile broadband category (including 3G & 4G), RJio still enjoys 54.5% subscriber market share.

Total subscriber-base rose 2% QoQ (23mn net add) to 1,169mn, and post-paid subs grew 4.5% (2mn net add) to 50mn. Bharti Airtel’s post-paid subscriber market share fell to 37.3%, down 160bps. VIL’s post-paid subscriber market was 50.9%.


Data usage market share dominated by RJio at 61.7%. Data usage grew 20% QoQ to 12,490-bn MB led by 4G data usage growth of 23% QoQ to 10,915-bn MB (and contributed 87.4% to total data usage), and 2G and 3G data volume rose 4.1% and 1.5% QoQ, respectively. Bharti and VIL’s data usage market shares were 21.3% (up 70bps QoQ) and 18.1% (down 185bps QoQ), respectively.

Industry minutes grew slower at 2.7% QoQ to 2,175bn due to significant dip in minute from challenger operators. Bharti Airtel’s minute market share dipped to 31.9%, down 40bps QoQ, while the same for VIL stood at 33.6%, down 100bps QoQ. RJio’s minute market share was at 24.5%, up 330bps QoQ.


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