Telecom | Update
10 June 2019
Motilal Oswal values your support in
the Asiamoney Brokers Poll 2019 for
India Research, Sales and Trading
request your ballot.
Industry growth still elusive
RJio gains 180bp market share, takes no 2 position
The Telecom Regulatory Authority of India (TRAI) has released its fourth-quarter
revenue report, which depicts a downtrend in the country’s telecom industry (AGR*
down 2% to INR316b).
RJio delivered 4% QoQ growth in AGR, capturing the number-two position (from
Bharti) with a 31.6% market share. Vodafone-Idea (VIL) maintained its number one
position with flat sequential growth and a 32.1% market share.
Bharti’s market share contracted steeply by 290bp QoQ to 27.2%. Its AGR declined by
11% QoQ, which is in stark contrast to that reported by the company (adjusted
revenue up 6% QoQ after netting off IUC) in its fourth-quarter results. There is
anomaly in the AGR trend in 6-7 circles.
RJio gained market share in 19/22 circles and is now the leader in 16/22 circles (v/s 4
in 3QFY19). Bharti lost market share in 13 circles and is now the leader in only one
circle – Karnataka (v/s 9 in 3Q). Vodafone Idea is the leader in five circles (v/s 9 in 3Q).
In our view, industry ARPU downtrading is now largely behind as there is limited price
differential among the top three players. However, once all the three players come at
par in terms of network capability, the subscriber churn will likely reduce, shifting the
focus again to ARPU accretion.
Industry AGR declines sequentially
Post some optimism in 3Q, the Indian telecom industry’s AGR* again lost steam in
4QFY19 with a decline of 2% QoQ (flat YoY) to INR316b. This can primarily be
ascribed to the 11% decline in Bharti’s AGR. Gross revenue was down 1% QoQ (-5%
YoY) to INR494b. For FY19, the industry’s AGR declined 2% to INR1,360b. However,
we note that the pace of decline has reduced significantly compared to the high-
single-digit fall seen until 2-3 quarters back. Despite the strong momentum in
subscriber addition by RJio, the industry’s overall subscriber base was impacted (-1%
QoQ to 1,162m) by the minimum recharge strategy adopted by the incumbents.
Industry’s adjusted AGR ARPU was down marginally by 2% QoQ to INR90.
AGR market share – RJio’s takes no. 2 position from Bharti
RJio’s AGR increased 4% QoQ in 4QFY19. Consequently, the company expanded
its market share to 31.6%, taking up the number two position. We, however,
note that the pace of RJio’s market share expansion has slowed down (+180bp
QoQ) from that in the previous two quarters (+350-400bp).
Bharti’s market share shrank steeply by 290bp QoQ to 27.2% (v/s 30.1% in
3QFY19), with AGR declining by 11% QoQ to INR86b – this is in stark contrast to
that reported by the company in its fourth-quarter results (adjusted revenue up
6% QoQ after netting off IUC cost).
Marred by intense competition for past several quarters, VIL reported flat
sequential growth in AGR, with market share expansion of 55bp to 32.1%.
Although VIL remains the number one operator, it is fast losing ground and, at
this pace, may find it difficult to retain this position over the next quarter or
Aliasgar Shakir – Research Analyst
(Aliasgar.Shakir@motilaloswal.com); +91 022 6129 1565
Hafeez Patel – Research Analyst
(Hafeez.Patel@motilaloswal.com); +91 22 6129 1568
10 June 2019
Investors are advised to refer through important disclosures made at the last page of the Research Report.
Motilal Oswal research is available on
Bloomberg, Thomson Reuters, Factset and S&P Capital.