The quarter ended September 2022 concluded on a positive note for both Bharti Airtel and Reliance Jio, while Vodafone Idea Limited (Vi) continued to report widening losses. All three telecom operators posted a consistent increase in revenue. Earnings before interest, taxes, depreciation and amortisation (EBITDA) for both Jio and Airtel remained above the Rs 100 billion mark during the reported quarter.
The key highlight of the quarter was the 5G spectrum auction conducted by the Department of Telecommunications. Jio emerged as the largest bidder, acquiring almost half of all the airwaves sold for a consideration of over Rs 880 billion. Meanwhile, Airtel and Vi committed Rs 430 billion and Rs 187.9 billion respectively.
Operationally, Airtel had the highest ARPU at Rs 190. Meanwhile, Jio continued to lead in terms of subscriber base with 427.6 million customers, owing to a healthy net subscriber addition of 7.7 million.
A look at the financial and operational results of operators during the quarter ended September 2022…
Reliance Jio continued to record a healthy financial performance. The net profit reported by the telco’s parent company, Jio Platforms Limited, grew from Rs 45.3 billion during the quarter ended June 2022 to Rs 47.29 billion during the quarter ended September 2022. The telco’s gross revenue for the quarter stood at Rs 285.06 billion, up from Rs 275.27 billion in the previous quarter. Meanwhile, the revenue from operations increased to Rs 242.75 billion from Rs 234.67 billion during the same period on the back of an increase in ARPU. Further, the operator’s EBITDA continued to be above the Rs 100 billion mark and increased from Rs 114.24 billion to Rs 120.11 billion, mainly led by strong revenue growth and margin improvement. The EBITDA margin improved from 48.7 per cent to 49.5 per cent due to an ARPU increase in connectivity business partly offset by inflationary pressure on operating costs.
On the operational front, Jio witnessed a 7.7 million net subscriber addition as gross additions remained strong (32.7 million during the quarter ended September 2022). Jio’s total customer base as of September 30, 2022 stood at 427.6 million.
The telco’s ARPU increased to Rs 177.2, recording an increase of 0.97 per cent on a quarter-on-quarter basis. The increase in ARPU was driven by better seasonality and improving subscriber mix. While the average data per user per month increased to 22.2 GB, the per capita voice consumption declined to 969 minutes. Further, the total data traffic and total voice traffic during the quarter stood at 28.2 billion GB and 1.23 trillion minutes respectively.
In the recent 5G spectrum auction, Jio consolidated its leadership position in all 22 circles by acquiring the right to use spectrum in several bands at a total cost of Rs 880 billion. The operator also continued to extend its leadership position in wireline services with almost 8 million connected premises.
Bharti Airtel’s consolidated net profit grew from Rs 16.07 billion during the quarter ended June 2022 to Rs 21.45 billion during the quarter ended September 2022. Moreover, the operator’s consolidated revenues increased from Rs 328.05 billion to Rs 345.27 billion backed by a strong and consistent performance across the portfolio. Meanwhile, the operator reported substantial growth in the consolidated EBITDA from Rs 166.04 billion to Rs 177.21 billion, while the EBITDA margin increased slightly from 50.6 per cent to 51.3 per cent during the same period.
For the India business, Airtel reported an increase in quarterly revenues from Rs 233.19 billion to Rs 243.33 billion. In addition, the India business reported an EBITDA of Rs 126.06 billion. Further, the capex spending on Airtel’s India business stood at Rs 56.84 billion.
On the operational front, Airtel posted the highest ARPU among telecom operators in the Indian market. Its ARPU for the quarter stood at Rs 190 as compared to Rs 183 in the previous quarter due to the company’s focus on quality customers, feature phone to smartphone upgradation, and data monetisation. Airtel’s subscriber base increased from 362 million to approximately 364 million. Further, Airtel continued to acquire a large share of 4G customers in the market and added 17.8 million 4G data customers to its network over the previous year. While the average data usage per customer increased to 20.3 GB per month, voice usage per customer declined to 1,082 minutes per month.
The telco also rolled out an additional 8,000 towers during the quarter to further strengthen its network coverage and provide ubiquitous connectivity. Several initiatives were also undertaken to improve network quality by leveraging digital tools/probes to monitor and improve customer experience and scale up voice over-Wi-Fi (Vo-Wi-Fi) adoption to improve indoor experience. The operator now has over 47 million customers using its Vo-Wi-Fi services.
With regard to 5G spectrum, Airtel has paid four years of spectrum dues worth Rs 83.12 billion. This upfront payment coupled with the ongoing moratorium on spectrum and adjusted gross revenue (AGR) dues will free up future cash flows and allow the operator to dedicate resources to drive 5G roll-out.
Vodafone Idea Limited
Vi recorded its fifth consecutive quarter of revenue and 4G subscriber growth. The telco’s revenue increased by 2 per cent on a quarter-on-quarter basis from Rs 104.1 billion during the quarter ended June 2022 to Rs 106.1 billion during the quarter ended September 2022. However, it reported a widening of its consolidated net loss from Rs 72.96 billion to Rs 75.95 billion during the same period.
The operator’s EBITDA (excluding Ind AS 116 impact) improved to Rs 21.2 billion, as against Rs 21.1 billion during the previous quarter, driven primarily by higher revenue and savings in spectrum usage charges offset by higher network expenses and customer acquisition costs. The capex spending during the reported quarter stood at Rs 12.1 billion as compared to Rs 8.4 billion during the previous quarter.
The telco’s total gross debt (excluding lease liabilities and including interest accrued but not due) stood at Rs 2,203.2 billion and comprised deferred spectrum payment obligations of Rs 1,366.5 billion (including Rs 172.6 billion towards the spectrum acquired in the 5G spectrum auction), an AGR liability of Rs 685.9 billion, which is due to the government, and debt from banks and financial institutions of Rs 150.8 billion. Further, the net debt stood at Rs 2,201.3 billion.
In the 5G spectrum auction, Vi acquired 5G spectrum and incremental 4G spectrum in various circles with a total commitment of Rs 187.9 billion and an annual instalment of Rs 16.8 billion over 20 years.
On the operational front, Vi’s subscriber base declined to 234.4 million from 240.4 million in the previous quarter. However, the telco’s ARPU improved to Rs 131 during the quarter ended September 2022, up by 2 per cent from Rs 128 in the quarter ended June 2022. However, its 4G subscriber base continued to grow. With 1.5 million customers added during the quarter, the operator’s 4G subscriber base stood at 120.6 million. Meanwhile, data usage per 4G subscriber stood at around 15 GB per month.