The quarter ended December 2021 proved to be a positive one for both Bharti Airtel and Reliance Jio, whereas Vodafone Idea Limited (Vi) continued to struggle financially owing to widening losses. Both Jio and Airtel continued to report a consistent increase in revenue and earnings before interest, taxes, depreciation and amortisation (EBITDA). In fact, both the telcos’ EBITDA crossed the Rs 100 billion mark during the quarter.
On the operational front, Airtel led the pack with an ARPU of Rs 163. Meanwhile, Jio had the highest subscriber base despite having reported a net reduction of 8.4 million in its subscriber base.
A notable development during the quarter was the prepaid tariff hike of around 20 per cent announced by all the three private telcos. As per industry analysts, these hikes complement the recent telecom relief package, which is likely to improve the credit profile of the industry and provide headroom for technology upgradation to 5G. While the tariff hikes helped improve the operators’ ARPUs during the quarter, their true impact will be realised in the upcoming quarters.
A look at the financial and operational results of telecom operators during the quarter ended December 2021…
Reliance Jio
Reliance Jio continued to deliver a robust financial performance, with its parent company, Jio Platforms Limited reporting a net profit of Rs 37.95 billion during the quarter ended December 2021, up from Rs 37.28 billion profit during the quarter ended September 2021. Further, the operator’s gross revenue increased from Rs 232.22 billion to Rs 241.76 billion while the revenue from operations grew from Rs 197.77 billion to Rs 205.97 billion during the same period. Meanwhile, the telco’s EBITDA crossed the Rs 100 billion mark for the first time, increasing from Rs 92.94 billion during the quarter ended September 2021 to Rs 100.08 billion during the quarter ended December 2021, while the EBITDA margin grew from 47 per cent to 48.6 per cent.
On the operational front, the telco’s gross subscriber addition remained strong with total gross additions of 34.6 million during the quarter ended December 2021, driven by both mobility and fibre-to-the-home (FTTH) businesses. The telco now has over 5 million connected FTTH customers. However, SIM consolidation and repurposing of customer retention efforts led to a net reduction of 8.4 million in the customer base during the quarter. of December 31, 2021, the total customer base stood at 421 million.
The telco’s ARPU improved to Rs 151.6, an increase of 5.6 per cent on a quarter-on-quarter basis. The increase in ARPU was driven by a better subscriber mix and recent tariff hikes. However, the full impact of the tariff hike will be reflected in ARPUs and financials over the next few quarters.
Meanwhile, the average data and voice consumption per user per month increased to 18.4 GB and 901 minutes, respectively. The total data traffic was 23.4 billion GB during the quarter, while the total voice traffic stood at 1.15 trillion minutes.
Another notable development during the quarter remained the launch of Jio and Google’s JioPhone Next, an affordable smartphone with an entry price of Rs 1,999 and an equated monthly instalment (EMI) spread over 18-24 months. With unprecedented features like an all-new Pragati operating system (OS), translate and read-aloud services in 10 Indian languages, and a host of preloaded Jio and Google apps, JioPhone Next is available across the country at Reliance Retail’s extensive network of JioMart Digital retail locations.
During the quarter, Reliance Jio paid Rs 307.91 billion (including accrued interest) to the Department of Telecommunications as prepayment of the entire deferred liabilities pertaining to spectrum acquired in auctions conducted in 2014, 2015, 2016 and the spectrum acquired in 2021 through trading of right to use with Bharti Airtel. It is estimated that the above prepayments will result in interest cost savings of around Rs 12 billion annually at the current interest rates.
On the 5G front, Jio stated that its 5G coverage planning has been completed for 1,000 top cities across the country.
Bharti Airtel
Bharti Airtel’s consolidated net profit declined from Rs 11.34 billion during the quarter ended September 2021 to Rs 8.3 billion during the quarter ended December 2021. However, the operator’s consolidated revenues grew from Rs 283.26 billion to Rs 298.67 billion, backed by strong and consistent performance delivery across the portfolio. Meanwhile, the consolidated EBITDA increased substantially from Rs 140.18 billion to Rs 149.05 billion and the EBITDA margin grew from 49.5 per cent to 49.9 per cent during the same period.
For the India business, Airtel reported an increase in quarterly revenues from Rs 198.9 billion to Rs 209.13 billion on account of increase in ARPU led by pricing intervention and continued momentum in 4G customer addition. In addition, the India business reported an EBITDA of Rs 104.07 billion, crossing the 100 billion milestone. The capex spending for Airtel’s India business stood at Rs 46.54 billion.
On the operational front, Airtel witnessed the highest ARPU among operators in the India market. The operator’s ARPU increased from Rs 153 to Rs 163 owing to the company’s unrelenting focus on winning with quality customers by delivering a differentiated experience. Airtel’s subscriber base increased from 355 million to 356 million. Further, Airtel continued to garner a strong share of 4G customers in the market with 4G data customers increasing from 192.5 million to 195.5 million. Meanwhile, average data usage per data per customer stood at 18.3 GB per month and voice usage per customer at 1,061 minutes per month. For the Africa market, Airtel reported an EBITDA margin of 49.5 per cent and an EBITDA margin of 33.7 per cent. Further, the capex spending for the quarter ended December 2021 stood at Rs 13.97 billion while the subscriber base stood at 125.8 million.
Like Jio, Airtel too made a pre-payment of Rs 155.19 billion to clear all the deferred liabilities for spectrum acquired in 2014. As per the telco, the move was undertaken to exercise flexibility and build a strong and efficient capital structure.
Airtel witnessed two key developments during the quarter. First, Hughes and Airtel formed a joint venture, which is now the largest satellite service operator in India. Second, Google announced plans to invest up to $1 billion in partnership with Airtel as part of its Google for India Digitisation Fund.
Vodafone Idea Limited
Vi’s consolidated net loss widened from Rs 71.32 billion during the quarter ended September 2021 to Rs 72.31 billion during the quarter ended December 2021. However, the telco’s revenue witnessed an increase of 3.3 per cent from Rs 94.06 billion to Rs 97.17 billion during the same period. The operator attributes the increase to several tariff interventions including tariff hikes effective November 25, 2021.
EBITDA (excluding Ind AS 116 impact) improved to Rs 16.2 billion, compared to Rs 14.1 billion during the previous quarter (post adjustment for one-off of Rs 1.5 billion in the quarter ended September 2021), aided by improvement in revenue and higher savings on account of the cost optimisation exercise, which is partially offset by higher marketing expenses. The capex spending during the quarter ended December 2021 stood at Rs 10.5 billion as against Rs 13 billion during the quarter ended September 2021.
The operator’s gross debt (excluding lease liabilities and including interest accrued but not due) stood at Rs 1,989.8 billion and comprised deferred spectrum payment obligations of Rs 1,113 billion, adjusted gross revenue (AGR) liability of Rs 646.2 billion that is due to the government, and debt from banks and financial institutions of Rs 230.6 billion. Further, the net debt stood at Rs 1,974.8 billion.
On the operational front, Vi’s subscriber base declined to 247.2 million from 253 million because of tariff interventions initiated during the last two quarters. The subscriber churn increased from 2.9 per cent to 3.4 per cent. However, the 4G subscriber base continued to grow and with 0.8 million customers added during the quarter ended December 2021. The 4G subscriber base now stands at 117 million. Meanwhile, the data usage per 4G subscriber stood at around 14 GB per month.
Kuhu Singh Abbhi
