Key highlights of the report include Ind-Ra's views that Reliance Jio Infocomm Limited's (RJio; IND AAA/Stable) introduction of ultra-low postpaid plans would lead to a further decline in profitability of incumbents as they are likely to revise their postpaid tariffs to retain their customer base.
Subscriber Growth: Subscriber growth remained positive during February and March 2018 on account of new attractive plans launched by telcos, in addition to growth stream of RJio. RJio added 9.4 million new subscribers; while Idea Cellular Limited (Idea) came close second by adding 9.14 million new subscribers. Bharti Airtel Limited (Bharti), Vodafone India Limited (Vodafone) and Bharat Sanchar Nigam Limited (BSNL) added 8.4 million, 5.6 million and 2.5 million new subscribers respectively. Exiting telcos reported 8.6 million subscriber losses on a combined basis in March 2018. Visitor location register (VLR- denotes active subscribers) subscribers showed improvement for all the major telcos except for BSNL which remained stagnant in March 2018.
Subscriber Market Share: RJio gained 6.5% subscriber market share during the 12 months ended March 2018. Top three telcos accounted for 58% of subscriber market share in March 2017, which increased to 62.1% in March 2018. Based on March 2018 data, Bharti's subscriber market share (including TTSL and Telenor) would be 31.5% (February 2018: 31.8%) and that of Vodafone-Idea combined would be 36.4% (36.2%).
Circle-wise Market Position: RJio held number three subscribers position in five out of eight top circles in March 2018 with number two position in Karnataka. Bharti maintained leadership position in six out of the top eight circles, whereas Vodafone number one position was limited to Gujarat circle. Vodafone and Idea on a combined basis would be number one in four circles.
Decline in Average Revenue Per User (ARPU): Competitive plans launched to maintain/increase subscriber base has led to continued decline in ARPU of the telcos with Idea recording the lowest ARPU. RJio recorded the highest decline of 11% qoq in ARPU (per month) in Q4FY18. Telcos continued their focus to increase the percentage of data subscribers as part of total subscribers to earn higher ARPU.
New Draft Telecom Policy: Proposed National Digital Communications Policy would bring about limited respite for the debt-laden telecom sector, although it lays a thrust on digital infrastructure and reflects a shift in the telecommunication regulation landscape. The draft policy proposes a rationalisation in spectrum usage charges to reflect the cost of regulation and administration of spectrum, as well as license fee and Universal Service Obligation Fund levy.
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