The previous quarter – January-March 2022 – was crucial for the telecom services industry in many ways. The th­ree major operators – Bharti Airtel, Re­li­an­ce Jio and Vodafone Idea Limited (Vi) – all implemented tariff hikes in December 2021 and the full effects became apparent in the next quarter. There was SIM consolidation, with many low-ARPU accounts becoming inactive or being terminated.

ARPUs improved for all three operators, but in varying degrees. Overall, the subscriber base increased marginally, and Airtel gained market share from both Jio and Vi. The price war is now clearly over and the three big players left standing are all gearing up for the next stage of the in­dustry’s evolution – 5G roll-outs.

Reports suggest that 5G auctions are likely to be launched around June-July and the government is targeting the first 5G call by the August-September timeframe. Around 100,000 MHz units of spectrum could be auctioned across the 600 MHz, 700 MHz, 800 MHz, 900 MHz, 1800 MHz, 2100 MHz, 2300 MHz, 2500 MHz, 3.3-3.67 GHz and 24.25-27.5 GHz bands, at a value of just over Rs 5 trillion, assuming 20-year licences.

If the cabinet clears the recommended terms and conditions, 5G spectrum would be offered approximately 35-40 per cent ch­­eaper than in the original 2018 recommendations. Licences are more likely to be given for 20 years rather than for the earlier period of 30 years. The Digital Com­m­unications Commission is reportedly of the view that millimetre wave spectrum in the 27.5-28.5 GHz range should be kept out of the 5G spectrum auction and retain­ed in­stead for broadband satellite players.

Industry analysts believe that the Tel­ecom Regulatory Authority of India’s (TRAI) suggested floor prices for 5G sp­e­c­trum are still very high in terms of glo­bal benchmarks. Hence, the bidding may not exceed the floor price by much and may be focused on the metros and Tier I cities. Nevertheless, this means another round of massive investments, as no service provi­der can afford to be left behind in terms of 5G roll-out.

In the January-March quarter, as of end-March 2022, the total subscriber base (wireless and wireline) was 1,167 million – a decrease compared to December 2021 wh­en the subscriber base was 1,178 million. Ab­out 788 million of these were broadband users, with about 760 million using some form of wireless broadband.

By March 2022, Jio’s wireless subscriber base was at 403 million, while Air­tel had 360 million subscribers and Vi was at 260 million. Airtel had gained 5 million subscribers compared to Decemb­er 2021 while Jio had lost 13 million and Vi had lost 6 million. The consolidation effect of the tariff hikes is apparent here.

Five service providers held 99 per cent of broadband market share. These were Re­liance Jio (409.28 million), Bharti Airtel (215.27 million), Vi (122.48 million), Bha­rat Sanchar Nigam Limited (27.19 million) and Atria Convergence Te­chnologies or ACT (2.08 million). Jio, th­erefore, held over 50 per cent share of the broadband market.

Jio remains the best placed in terms of most metrics. It has the highest all-broadband subscriber base and its tariff hike has led to the shedding of low-ARPU accoun­ts. It also has a parent with a big balance sheet, which will be able to ensure that it gets the spectrum it wants without much financial stress. It has managed an ambitious fixed broadband roll-out, which has pushed it into pole position in that segment. Jio also has unique linkages with the group’s own digital retail operations, whi­ch could enable it to offer a seamless e-co­m­merce experience to customers, inclu­d­ing tie-ups going all the way to local corn­er kirana grocery stores. It also has tie-ups with global digital giants such as Facebook and Google, which will enable it to supplement its own efforts to develop an in­di­genous 5G ecosystem along with an entry to the metaverse.

Airtel holds second place in terms of market share and appears confident it can raise the financing required to service the existing debt and to commit the additional resources necessary to roll out 5G. Its Afri­ca operations are also stabilising, which tak­es some pressure off its balance sheet.

Vodafone Idea still has question marks about its future. It has improved its ARPUs significantly, but it is a long way from reaching financial health. The debt moratorium, coupled with additional investments committed by its parents, has given it some breathing space. But it is still losing subscribers and is well behind Airtel and Jio in terms of ARPU, per subscriber data consumption, etc., with over half the base still on voice-only plans. Vi is also a pure-play mobile service provider, unlike the other two private players, which both offer fixed broadband. Vi will definitely need a strategic investor with deep pockets to enable it to roll out 5G and compete meaningfully in that landscape. If it cannot carve out some market share, the telecom industry could turn into a duopoly, which will not be desirable in many ways.

A brief look at company-specific trends follows…

Reliance Jio

Jio had a good quarter, with operating pro­fits (earnings before interest, taxes, de­preciation and amortisation [EBITDA]) rising 10.5 per cent over the third quarter of 2021-22 while revenues rose 7.8 per ce­nt quarter on quarter. Revenues hit Rs 209 billion while EBITDA was at Rs 105 billion. Mobile ARPUs rose from Rs 148 in De­cember 2021 to around Rs 164 in Mar­ch. Data usage rose by around 5 per cent quarter on quarter and by 47 per cent year on year compared to January-March 2021. The average data usage per subscriber (mo­bile and fixed aggregated) is now aro­u­nd 19 GB per month, compared to 13 GB a year ago. Mobile subscribers are estimated to use 16-plus GB per month.

However, free cash flow for the service provider dropped, mainly due to an in­cr­ease in capital expenditure. Over the last fiscal year, Jio’s capex (ex-spectrum) grew by over 100 per cent. There was also a rise in internal receivables from the Reliance Retail segment, which would have impacted free cash flow.

Bharti Airtel

Airtel declared consolidated revenues of Rs 315 billion, which is up by 22 per cent year on year. The India business posted reven­ues of Rs 225 billion, up 23 per cent. The consolidated EBITDA was Rs 160 billion, with the India business EBITDA at Rs 114 billion. The EBITDA margin is around 50.8 per cent, which is a 1.9 per cent im­pro­ve­ment year on year. The consolidated PAT, after adjustment for exceptional items, was at Rs 20 billion, and at Rs 18.6 billion befo­re exceptional items. The India 4G customer base is around 62 per cent of all subscribers. The ARPU has jumped to Rs 178 from Rs 145 in the third quarter. Data consumption per mobile customer is 18.8 GB, which compares well with Jio.

The company paid down Rs 88.15 billion towards part prepayment of deferred liabilities pertaining to 2015 spectrum, and it acquired an additional 4.8 per cent stake in Indus Tower, taking the total hol­ding of the Bharti Group in Indus Towers to 46.5 per cent. Its total customer base across 16 nations stands at 491 million, with 360 million India subscribers. Africa revenues were up 19 per cent year on year (in constant cu­rrency terms) and its customer base is 128 million. Its India capex was at Rs 42.7 billion for the fourth quarter, while the Africa capex was Rs 16.8 billion. Its total debt amounts to Rs 1.6 trillion but, given a free cash flow of Rs 324 billion for 2021-22, this can be serviced. Ideally, the net debt-to-EBITDA ratio needs to come down. But the company should have the resources to fund its 5G roll-out.


Vi saw ARPU gains, with ARPUs rising to Rs 124 versus Rs 115 in the third quarter. The low ARPU compared to Jio and Airtel is mainly because it has a low broadband su­b­scriber base of only about 118 million 4G users – less than half of the total subscriber base. Data usage per broadband user is at around 14 GB. The company has im­p­r­oved its operating margins, with an EBITDA of Rs 46.5 billion, up 22 per cent quarter on quarter, on revenues of Rs 102 billi­on, whi­ch is a growth of 5.4 quarter on quarter.

The operating margin (EBITDA as a percentage of revenues) is around 45.5 per cent, which is an improvement of around 6 per cent. The huge debt overhang, however, means that the company reported a loss of Rs 65.6 billion. The consolidated debt st­ood at Rs 1.98 trillion, comprising Rs 181 billion of debt to financial institutions, Rs 1.139 trillion of spectrum liability and Rs 660 billion of AGR liability.  The promoters infused Rs 45 billion to shore up the balance sheet.

The Vi management says it still awaits the Department of Telecommunications’ confirmation for its intent to convert Rs 160 billion of deferred spectrum/AGR dues into equity assigned to the Gover­n­ment of India (GoI). Once this goes th­ro­ugh, the GoI will hold 33 per cent and the promoters will hold 50 per cent stake, with the GoI being the single largest shareholder. Around Rs 160 billion of bank guarantees have been returned by the government till now.

Although ARPUs have improved and so has the 4G base, Vi needs a strategic investor. It is still looking for an infusion of Rs 100 billion, which has been cleared by the board. It also needs a considerable ARPU boost, especially since it has lost subscribers.


Overall, it seems that the tariff hikes have worked in that all three private majors have benefited from higher ARPUs and improv­ed EBITDA. All of them must now brace for another round of capex. Jio remains in pole position in the industry, given the strength of its parent’s balance sheet and its ability to find retail synergies within the group. Airtel is well-placed to provide stiff competition. Vi has to find another source of ample funding and push up its ARPUs in order to survive in the 5G environment.

Devangshu Datta