The agencies also made the recommendation based on “the nature of China Telecom’s US operations,” which they said allow Chinese government actors “to engage in malicious cyber activity.(Mint)
The agencies also made the recommendation based on “the nature of China Telecom’s US operations,” which they said allow Chinese government actors “to engage in malicious cyber activity.(Mint)

Telecom sector revenues back at pre-Jio levels

According to data released by the Telecom Regulatory Authority of India (Trai), net mobile revenues rose 4.5% sequentially to $25 billion in the December quarter. The last time the sector had earned $25 billion was in April-June of calendar year 2016.
By Ishita Guha
PUBLISHED ON FEB 27, 2021 04:43 AM IST

The revenues of India’s telecom sector have recovered to levels seen in the years before Reliance Jio Infocomm Ltd’s entered the field in September 2016, causing massive disruptions with nearly-free voice and data offers that forced others to slash prices.

According to data released by the Telecom Regulatory Authority of India (Trai), net mobile revenues rose 4.5% sequentially to $25 billion in the December quarter. The last time the sector had earned $25 billion was in April-June of calendar year 2016.

The revenues of the sector declined to the lowest of $18 billion in the fiscal year 2018-19, forcing some players to exit their businesses, and others to merge with bigger companies. For instance, Vodafone India Ltd and Idea Cellular Ltd completed their merger in August 2018 to continue business amid mounting debt and shrinking revenues.

The average revenue per user (Arpu) of Bharti Airtel Ltd plunged to 100 per month in Q2FY19, from R196 in the first quarter of fiscal 2017.

Before the merger, Idea’s Arpu stood at 181 and it fell to a record-low of 88, for the combined entity, in July-September FY19.

Jio’s Arpu, in the second quarter of financial year 2019, was at 131.7.

“Trai’s latest disclosures reveal that net mobile revenues in India rose 4.5% quarter-on-quarter to an annualised $25 billion in Q3FY21. This is in line with the peak levels seen before Jio’s entry,” Jefferies equity research said in a report.

Though the sector revenues are up 40% from the lows of Q4FY19, they are still marginally lower, about 1%, than the historical high reported in the June quarter of FY17, CLSA said in a report.

The recovery in sectoral revenues, however, could dampen the chances of a floor set for tariffs as the pressure of shrinking revenues was the main reason cited by struggling telecom operators that had urged Trai to fix the minimum prices for services, analysts said.

“Trai is still assessing whether it should set a floor price for voice and data services. If Trai decides to go ahead with this, it will be a historical decision. We will have to look at the impact on all stakeholders, including customers and companies who should not have windfall gains,” a top official at the regulator told Mint, on condition of anonymity.

“We do not have many examples in the world where developed nations have set minimum prices and that is making it more difficult,” the official added.

With a focus on high-paying and premium 4G customers, Airtel managed to take its Arpu to 166 in the December quarter. Though Vodafone Idea Ltd (VIL) follows a similar approach, its Arpu, at 121 in Q3FY21, remains the lowest among the three largest telcos in the country as it has been losing millions of subscribers on the lower end, which offsets the additions.

Both Airtel and VIL aim to achieve an Arpu of 200 initially, and 300 eventually, as per their management commentary.

The top three telcos constituted 91% of the total sector revenues in the December quarter, CLSA said, adding that Reliance Jio led revenue market share with 39%, while Airtel’s share was at 31%, down 30 basis points q-o-q but 40 bps higher than a year ago.

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