Last week, the UK-based Vodafone Group announced the infusion of Rs 47,700 crore of fresh equity into its Indian arm. The move comes at a time when the telecom industry is gearing up for the biggest spectrum auction in the history of the sector in India. As Chart 1 shows, seven operators have submitted the earnest money, with Reliance Jio (RJio) leading the pack, followed by Vodafone and Idea.
By offering free voice services, RJio has upended the market. Currently, users on an average consume about 400 minutes of talktime a month which, at an average realisation of 35-40 paise per minute, translates into revenues of around Rs 140-160 per month. Existing operators hope that the decline in voice revenues will be offset by the rise in data revenues as both data subscribers and data usage by customers increase.
As Chart 2 shows, data usage per customer has increased sharply over the past two years. But this rise has been accompanied by falling incremental revenues, with realisations per MB falling, as seen in Chart 3. As a consequence, growth in data revenues for major telecom operators has slowed over the past few years, as shown in Chart 4. Analysts are sceptical whether the decline in voice revenues can be offset in the near term by a rise in data revenues.