Reliance Jio, Airtel, Vodafone Idea report similar revenue market share

The revenue market share (RMS) of the top three Indian telecom players has reached a state of equilibrium for the first time since the launch of Reliance Jio in September 2016 in the first three months of January-March 2019 quarter. Reliance Jio reported mobile RMS, including access services and national long-distance revenues, of near 31%, Vodafone Idea (VIL) stood at about 31% and Bharti Airtel was a tad above 29%. The remaining is shared among the smaller players.

While Reliance Jio has maintained its trajectory of RMS gains, benefiting mostly from Vodafone Idea’s slow 4G expansion and at the expense of smaller telecom players, its pace seems to have slowed down. The company reported an RMS of nearly 31% in the quarter ended March 2019, versus about 30% in Q3FY19.

This would be slow compared with how Jio’s RMS surged a good 640 basis points from 14.3% in Q2FY18 — which is when it reported its first full earnings, to 20.7% at the end of 2017-2018. Thereon, the increase in RMS has been significantly sharp quarter-on-quarter. According to analysts, the intensity of RMS gains has decelerated due to slower revenue growth.

After posting impressive set of numbers for the last five quarters, Jio disappointed on almost all fronts by missing analyst estimates in its January-March earnings. During the period, the company’s net profit at Rs 840 crore, was up by a mere 1.1% sequentially, far below a 25% growth estimated by brokerages. Jio’s revenue during the quarter also missed estimates at Rs 11,106 crore, a growth of 7% on a sequential basis.

However, given Jio’s continued push on feature phones, it is likely to gain further market share, mainly from Vodafone Idea which has a lag in 4G network (around 65% population coverage), analysts at CLSA observed. Bharti Airtel’s RMS, down from its peak levels of over 32% before the launch of Jio, slipped further in the fourth quarter to stand at slightly above 29% in January-March 2019, but is stable compared with Q3FY19.

According to Airtel’s management, the competitive intensity has stabilised and that is reflecting in the company’s stable revenue performance over the last few quarters. Airtel witnessed an increase of 4.35% q-o-q in the company’s India mobile services revenue to Rs 10,632.3 crore for the three months of January-March 2019.

However, Gopal Vittal, joint managing director and CEO (India & South Asia), Bharti Airtel, says it is a “brutal marketplace in terms of the pricing structure”. “It (competitive intensity) is stable because we are not seeing any further reduction in pricing…(but) our ARPU (average revenue per user) used to be Rs 200, and now, it is down to `125-odd. So, to that the extent, there is a significant ARPU reduction, and for that, industry repair has to happen,” he told analysts recently.

The biggest loser in the RMS race has been VIL, which continues to lose out to Jio, with the latter being the leader in eight circles all in B and C categories, while having more than 30% RMS in 17 circles, according to analysts at a domestic brokerage. VIL lost market share in 14 circles which contribute 50% of its total adjusted gross revenue, whereas Jio gained market share in these circles, another brokerage observed. VIL had an RMS of about 31% for the three months of January-March 2019, similar to that of Jio.

Balesh Sharma, CEO, Vodafone Idea, said the company is increasing coverage, creating capacity and customer experience, especially from certain geographies where it lacks coverage. “Integration takes time, though it is moving at a good speed. We are aware that in terms of competitiveness we are not fully there. So, while you still have for example 65% coverage on 4G there are certain geographies where our 4G coverage is not there and therefore the customers when they decide to move on on to 4G we are not in consideration,” he told analysts.

What is heartening here is that analysts believe this market share equilibrium should also reduce the likelihood of any material tariff cuts by Jio. “Revenue market shares for Bharti, Vodafone Idea and Jio have converged at circa 31%, which should reduce the likelihood of any material tariff cuts by Jio,” analysts at CLSA said.