Data | Telecom sector is recovering, AGR decision is a relief
Vodafone-Idea and Airtel have recovered significantly in recent quarters from record losses of Rs.510 billion and Rs.230 billion, respectively, in T2FY2020
Redefining adjusted gross revenue to exclude non-telecom revenue and a four-year moratorium on dues could give struggling telecom giants a break. With Vodafone-Idea and Airtel pulling out of record losses in 2019, fears of a duopoly or emerging monopoly in the industry have been temporarily delayed. And with Jio’s price increase in recent times, the average earned revenue per user is also on the rise, giving the industry a boost.
From 14 players in 2009-10, the telecoms sector grew to just four in 2020-21. Jio’s rapid rise and stagnant growth of Airtel meant that oligopoly fears were quickly becoming reality. However, Airtel’s profits over the past two quarters and reduced losses at Vodafone-Idea point to a recovery.
Vodafone-Idea and Airtel have recovered significantly in recent quarters after record losses of 510 billion yen and 230 billion yen, respectively, in the second quarter of fiscal 2020.
Waves of change
The graph shows how the telecommunications sector has consolidated after mergers and exits over the past decade. The operators are differentiated by colored bands. The larger the band, the more subscribers there are at any given time.
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Back from record losses
After recording significant losses, Airtel has returned to the green for the last two quarters. Vodafone-Idea is still in the red. However, it has recovered from the record losses of 2019. Reliance Jio remains in the green. The graph shows ‘profit from ordinary activities before tax’ in ₹ billion.
Since Jio’s inception in 2016, data usage and time spent on calls have increased due to the extremely low rates initially charged by the company. Lately, movement restrictions imposed during the pandemic have further increased data and call traffic.
Between 2016 and 2019, despite an exponential increase in the number of subscribers and, consequently, the use of data and calls, companies’ revenues from these services fell as Airtel and Vodafone-Idea both reduced their tariffs to stop the flow of customers to Jio. However, with the recent increase in its tariffs by Jio, the revenue earned per user is also on the rise. However, it is still well below the levels seen before Jio entered.
Source: TRAI, BSINDIA
Read also: Rise in tariffs crucial for the survival of telecom operators: analysts