Telecom Connect by India Ratings and Research (Fitch Group)
Ind-Ra-New Delhi-1 August 2018: India Ratings and Research (Ind-Ra) has published the June edition of its credit news digest on India’s telecom sector. It highlights the trends in the telecom sector with a focus on subscriber additions, subscriber market share, circle wise additions, broadband subscribers, data usage and pricing.
Key highlights of the report include the muted subscriber growth in May 2018 and reduction in the number of active wireless subscribers. There was a reduction of 49 million subscribers in May 2018 on a yoy basis. Idea Cellular Limited (Idea) was the only major telco to witness a reduction in subscriber base in May 2018; it lost 2.5 million subscribers. Bharti Airtel Limited’s (Bharti) subscriber growth of 36 million during the same month was driven by the completion of its merger with Telenor (India) Communications Private Limited (Telenor). Reliance Jio Infocomm Limited (RJio; ‘IND AAA’/Stable) continued to report a steady increase in its subscribers and reported 9.34 million new subscriber additions in May 2018.
Industry visitor location register (VLR – denotes active subscribers) ratio fell to 87% in May 2018 from 89.8% in April 2018. VLR ratio of Bharti fell to 95.3% in May 2018 (April 2018: 106.3%) as it completed the merger of Telenor which had VLR ratio of 67% in April 2018. Bharti added 58 million VLR subscribers during May 2017 to May 2018, of which 35 million were from Telenor. Vodafone India Limited (Vodafone) added 11 million VLR subscribers and Idea added 8 million subscribers while RJio added 83 million VLR subscribers over May 2017 to May 2018. Reliance Communications Limited and Tata Teleservices Limited lost almost all their VLR subscribers.
Bharti’s subscriber market share increased to 30.5% in May 2018 on account of its merger with Telenor. Vodafone-Idea combined subscriber market share increased by 4.4% yoy to 39% in May 2018. RJio subscriber market share increased 8.3% yoy to 18.2% in May 2018.
The internet penetration in India increased to 38% in March 2018, from 34% in December 2017. Out of the total internet subscribers, 83% were broadband subscribers.
The Department of Telecom has given approval to the merger of Vodafone and Idea in July 2018 after the companies paid INR72 billion (INR39 billion in cash and INR33 billion as bank guarantees) as spectrum liberalisation charge and a one-time spectrum payment.
Bharti announced its 1QFY19 results, registering a 9% yoy decline in consolidated revenues to INR200 billion, and a 13% yoy decline in EBITDA to INR68 billion. Bharti’s mobile services (India) business revenue declined 19% yoy to INR104 billion, and EBITDA declined 38% yoy to INR28 billion. Despite an increase in data and voice usage, the average revenue per user declined to INR105 in 1QFY19 (1QFY18: 154; 4QFY18: 116). RJio also announced its 1QFY19 results wherein its operating revenue grew by 13.8% qoq to INR81 billion and its EBITDA grew by 16.8% qoq to INR31 billion. RJio’s average revenue per user declined by 1.9% qoq to INR134.5.