During the quarter ended March 2020, Indian telecom operators finally saw an uptick in ARPUs, driven by tariff hikes introduced in December 2019. Airtel’s ARPU rose to the highest in nearly three years with a 14 per cent jump on a sequential basis. Airtel’s ARPU was 17 per cent higher than that of Reliance Jio, indicating its higher market share in both the top-end post-paid and prepaid user segments. In contract, ARPU growth was less pronounced for Jio, at a mere 2 per cent during the quarter. The data traffic on networks continued to rise, largely due to the Covid-19 outbreak, which forced people to work from home using their mobile data networks/home broadband for accessing the internet.
During January-March 2020, Jio continued to witness a strong top line growth and a significant margin expansion, whereas Airtel struggled with mounting losses. The telco’s pleas to the Supreme Court on the adjusted gross revenue (AGR) issue were overruled, forcing Airtel to pay about Rs 180.04 billion to the government as arrears. As per the Department of Telecommunications (DoT), Airtel owes Rs 370 billion to the government as AGR dues.
In the telecom infrastructure segment, Bharti Infratel reported its results for the quarter under consideration and extended the timeline for the completion of its merger with Indus Towers to late June 2020.
A look at the operational and financial results of telecom companies for the quarter ended March 2020…
The operator’s consolidated net loss increased to Rs 52.37 billion in the quarter ended March 2020. The company had posted profits worth Rs 1.07 billion in the corresponding quarter in the previous year. The operator’s reassessed regulatory costs related to spectrum charges stood at Rs 70.04 billion, which led to a higher-than-expected loss. However, the operator’s total revenue grew by 15 per cent from Rs 206,022 million during the quarter ended March 2019 to Rs 237,227 million during the corresponding quarter in 2020. Meanwhile, the stand-alone earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 52 per cent on a year-on-year basis from Rs 68,064 million to Rs 103,263 million during the period under consideration.
Airtel’s revenue was mainly driven by the growth in its India business due to tariff hikes in December 2019. The nationwide lockdown, effective March 24, too, resulted in higher data consumption. In India, the company’s revenues increased 14.4 per cent year on year to stand at Rs 174.38 billion. Further, the company recorded a year-on-year growth of 21.8 per cent in mobile revenues primarily led by an increase in the 4G customer base and improved tariffs.
Consequently, the ARPU rose to Rs 154 from Rs 123 a year ago. This helped the company report a 10 per cent uptick in its India business and an 8 per cent increase at the consolidated level. With wireless subscribers almost at the same level as in the third quarter of 2019-20, revenue growth for the India mobile business on a sequential basis was driven entirely by the increase in ARPUs.
Airtel Africa, too, saw a revenue growth of 15.1 per cent to $899 million owing to customer additions and higher data revenue. Further, net revenues stood at $715 million and EBITDA at $397 million.
During the quarter, Airtel’s total customer base increased by 4.9 per cent from 403.69 million to 423.2 million. While the South Asia market witnessed the maximum
growth of 13.2 per cent in customer base from 2,587 to 2,929, the customer base in the Africa market grew by 11.9 per cent from 98.8 million to 110.6 million. In India, the customer base grew by 2.5 per cent from 302.2 million to 309.75 million. The most notable achievement was the significant increase in the 4G subscriber base. Airtel added a record 12.5 million 4G subscribers in a single quarter. While the Indian mobile subscriber base growth was somewhat flat at 283 million, there was a robust 10 per cent growth in the 4G subscriber base, which stood at 148 million. Further, the company recorded a strong year-on-year data traffic growth of 74.1 per cent. The mobile data traffic increased by 74.2 per cent to 6,010 PBs in the quarter ended March 2020 as compared to 3,451 PBs in the corresponding quarter in 2019.
During January-March 2020, Reliance Jio recorded a year-on-year growth of 177.5 per cent in net profits, from Rs 8.4 billion to Rs 23.31 billion. The operator continued to gain a market share at the expense of Vodafone Idea Limited (VIL) as it added 18 million subscribers to reach a customer base of 388 million, the highest in the industry.
The stand-alone revenue from operations, including access revenues, grew from Rs 117.15 billion to Rs 148.35 billion during the period. Meanwhile, the stand-alone EBITDA increased by 43.2 per cent on a year-on-year basis from Rs 43.29 billion to Rs 62.01 billion and the EBITDA margin grew from 37 per cent to 41.8 per cent.
On the operational front, customer engagement continued to be robust with average data consumption of 11.3 GB per user per month. The operator’s average voice consumption stood at 771 minutes per user per month during the quarter ended March 2020. Jio’s ARPU improved and stood at Rs 130.60 per subscriber per month as the company had started charging 6 paise per minute for calls made to other telcos’ networks since the previous quarter. However, the growth in ARPU was just 1.7 per cent sequentially despite tariff hikes and an increase in interconnection charges, as not all its subscribers moved to new rates in the reported quarter, but were locked in at old rates.
Meanwhile, Jio continued to be a net recipient of access charges with the outgoing traffic mix within the overall off-net traffic now stable at 48-49 per cent. The total wireless data traffic stood at 12.84 billion GB, while the total voice traffic during the quarter stood at 876.3 billion minutes. The company maintained a strong momentum in subscriber acquisition with a gross addition of 23.9 million subscribers and a net addition of 17.5 million subscribers, taking its total subscriber base to 387.5 million as of March 31, 2020.
During the quarter, Facebook signed an agreement with Reliance Industries Limited for an investment of Rs 435.74 billion in Jio Platforms. Facebook’s investment will translate into a 9.99 per cent equity stake in Jio Platforms on a fully diluted basis. Meanwhile, Jio Platforms, Reliance Retail Limited and WhatsApp have entered into a commercial partnership agreement to further accelerate Reliance Retail’s New Commerce business on the JioMart platform using WhatsApp and to support small businesses on WhatsApp.
Recently, Jio Platforms has received significant interest from global technology investors despite depressed market sentiment amid the Covid-19 crisis. In addition to Facebook’s Rs 435.74 billion investment, strategic and financial investors such as Silver Lake, Vista, General Atlantic and KKR have acquired stakes in Jio Platforms. With this, the aggregate investments in Jio Platforms amounted to Rs 785.62 billion.
Bharti Infratel posted a consolidated net profit of Rs 6.49 billion during the quarter ended March 2020. On an annual basis, the net profit increased by 7 per cent from Rs 6.07 billion in the quarter ended March 2019. Further, the company’s consolidated revenue rose by 0.7 per cent year on year from Rs 3.6 billion to Rs 3.62 billion. It reported a growth of 12 per cent in its consolidated EBITDA from Rs 15.34 billion during the quarter ended March 2019 to Rs 17.21 billion during the quarter ended March 2020. However, the operating cash flow was down 47 per cent year on year from Rs 11.54 billion to Rs 8.47 billion.
The company’s tower addition in the quarter stood at 1,128 on a net basis, amounting to an installed base of 95,372. On a year-on-year basis, the firm acquired 1,857 co-locations, taking the total number of co-locations to 174,581.
Meanwhile, Bharti Infratel has extended the date for its merger with Indus Towers for the fourth time, to June 24, 2020. In February 2020, DoT approved the merger deal. As per the company, the proposed merger is expected to be completed soon as the principal shareholders, the Bharti Group and VIL, have reportedly opted for a share-swap arrangement instead of the original plan. According to the plan, Bharti Infratel will acquire VIL’s entire 11.15 per cent stake in Indus Towers for Rs 45 billion in cash. The company, however, remained concerned on the negative outcome of the AGR case, as its top major customers, Bharti Airtel and Vodafone Idea, are the worst hit.