Airtel revenue market share at 7-year high; pips Vodafone, Idea in data rollouts

KOLKATA: Sunil Mittal-led Bharti Airtel’s revenue market share (RMS) hit a 7-year high at 33% in the July-September quarter despite having to roll in with a monthlong sock from Reliance Jio Infocomm’s free welcome offer.
India’s No 1mobile carrier stole a march over its nearest incumbent rivals, Vodafone India and Idea Cellular, on the strength of swift data network rollouts and a superior 3G/4G spectrum mix, analysts said.

Market leader Bharti Airtel consolidated its overall lead, increasing RMS by 20 basis points (bps) sequentially to 33% in the July-September period, twice Vodafone’s (10 bps) growth level, while No 3 carrier Idea lost 50 bps. Second-largest carrier Vodafone India’s RMS rose a modest 10 bps quarter-onquarter to 23.5%, while Idea’s fell 50 bps sequentially to 18.8%.

“Despite Jio’s launch, we expect Bharti to be able to grow RMS, given its ability to keep pace with the newest telecom operator’s 4G network rollout and its best-in-class (data) spectrum portfolio,” brokerage Goldman Sachs said, analysing data put out by Telecom Regulatory Authority of India (Trai).

Industry experts said the first 25 days of impact of Jio’s free services were minimal, given that fewer calls from the 4G entrant’s network went through to subscribers of incumbent carriers due to heavy call failures caused by interconnection challenges. In fact, they do not expect the real impact to be visible before the third and fourth quarters of this fiscal.

Citi Research recently said Jio’s Welcome Offer impact on incumbent carrier net-adds even in October had been negligible as the 4G entrant’s focus continued to be urban — where offtake was likely through dual SIMs — unlike incumbent carriers, who targeted customer adds in rural markets. “Airtel’s gains in the September quarter were also driven by its faster network rollout vs peers,” Goldman Sachs said.

Chairman Mittal had recently told ET he expected Bharti to boost revenue share by “a couple of percentage points by March 2018,” notwithstanding a possible squeeze in margins on account of Jio’s entry. Analysts expect Bharti’s India wireless Ebitda margin to fall 370 bps over the next two years following Jio’s entry.

Separately, Airtel, Vodafone India and Idea collectively reported a 240 bps on-year growth in combined RMS to 75.2% in the September quarter from 72.8% a year ago.

Brokerage IDFC said Bharti Airtel retained market leadership in 13 out of the country’s 22 telecom circles while Idea lost market share in as many as 20 circles. Vodafone India, in turn, reported a weaker show in key markets like Gujarat, Maharashtra and UP-East, though it gained in Mumbai, Kerala and Andhra Pradesh in the second fiscal quarter, it said.

IIFL Institutional Equities said Bharti has been the strongest, outperforming Idea even in third-largest carrier’s 900 MHz circles. “Bharti has been the largest gainer not only in its own 900 MHz circles, but also in those of Vodafone and Idea,” the brokerage said.



Going forward, it expects Vodafone India to improve RMS performance, given that the company has added more mobile broadband spectrum “in its strong circles” in the October spectrum sale.

Among smaller players, Tata Teleservices and Telenor India were able to hold on to RMS at 6.5% and 2.5% respectively, despite seasonality in the second quarter, said HSBC’s Rajiv Sharma.

“This suggests the early impact of Jio’s free services offering, primarily around data, was more on the (top 3) incumbent carriers since GSM new entrants like Tata Tele or Telenor are hardly present in data services,” he said.