Telecom industry is at last seeing healthy improvement in key parameters

But more gains are crucial to telecom industry given investment plans and elevated debt levels

Bharti Airtel was the third telecom major to declare January-March quarter (Q4) results and industry trends are clearly improving. Reliance Jio, Vodafone Idea (VIL) and Airtel together control 90 per cent subscriber market share. All three raised tariffs in December, leading to higher ARPU (average revenue per user, per month). Revenue is up and EDITDA margins have improved for all. EBITDA is earnings before interest, tax, depreciation and amortisation.

The 5G spectrum auctions are due in June-July assuming Cabinet clears TRAI’s proposal. Base auction prices have been cut by 35-40 per cent for most bands, compared to the 2018 valuations. But analysts contend auction prices are still very high. However, some investment is likely to roll-out 5G in metros and Tier 1 cities.

By end-March 2022, the subscriber base (wireless + wireline) was 1,167 million – a drop from 1,178 million in December 2021. Out of 788 million broadband users, about 760 million were on wireless. Jio’s wireless base was at 403 million, Airtel had 360 million and VIL 260 million.

Airtel gained 5 million subscribers compared to December 2021, Jio lost 13 million and VIL lost 6 million. Jio with a total of 409 million held over 50 per cent share of the broadband segment, while Airtel had 215.27 million broadband subscribers and VIL had 122.48 million.

Jio’s EBITDA rose 10.5 per cent to Rs 10,500 crore over Q3, 2021-22. Revenues rose 7.8 per cent quarter-on-quarter (QoQ) to Rs 20,900 crore. Mobile ARPU went from Rs 148 (Q3) to Rs 164. The average monthly data usage/subscriber (mobile plus fixed) is 19 Gb (gigabyte). Over the last fiscal, Jio’s capex (ex-spectrum) rose over 100 per cent. There was also a rise in internal receivables from Reliance Retail.

VIL’s ARPU rose to Rs 124 versus Rs 115 in Q3. Data usage per broadband user is 14 Gb. EBITDA margins improved by 6 per cent, with EBITDA of Rs 4,650 crore, up 22 per cent QoQ, on revenues of Rs 10,200 crore, up 5.4 per cent QoQ. The huge debt overhang led to net loss of Rs 6,560 crore.

Consolidated debt was Rs 1.98 trillion, including Rs 1.14 trillion of spectrum liability and Rs 660 billion of AGR (adjusted gross revenue) liability. The promoters infused Rs 45 billion. Once the government formally accepts the moratorium offer to convert debt to equity, it will be the single-largest shareholder in VIL. VIL is still looking for an infusion of another Rs 100 billion, via a strategic investor.

Airtel declared consolidated revenues of Rs 31,500 crore, up 5.5 per cent QoQ. Consolidated EBITDA was Rs 16,040 crore, up 9 per cent QoQ, with India EBITDA at Rs 11,400 crore. The EBITDA margins (Consolidated and India) are both at near 51 per cent. Consolidated PAT after exceptional items was Rs 2,010 crore, and Rs 1,860 crore before exceptional items, versus consolidated Q3 PAT of Rs 810 crore. The ARPU jumped to Rs 178 from Rs 145 in Q3. Data consumption is at 18.8 Gb per subscriber. Airtel paid down Rs 8,815 crore towards 2015 spectrum liabilities, and took an additional stake in Indus Tower, (the total Bharti group stake in Indus Towers is now 46.5 per cent). Airtel Africa was flat in revenue and EBITDA. The Consolidated total debt is about Rs 1.6 trillion but free cash flow was Rs 324 billion for FY 2021-22. The net debt to EBITDA ratio needs to reduce.

The VIL share price remains stuck in the Rs 9-10 range. But Airtel has reacted down by almost 3 per cent since the results were declared and it is down around 5 per cent in the last month.