Jio eats into rivals’ revenues

11-10-2017

The advent of Reliance Jio has dramatically reduced the revenues of other telecom companies in Karnataka.

The top six telecom companies---Airtel, Aircel, BSNL, Idea, Vodafone and Reliance Communications (RComm)---have collectively seen a decline of 22.36% in their revenues over the past year.

Aircel is the worst-hit, with a steep decline of 51.71% in adjusted gross revenues from the state. According to data available with the Telecom Regulatory Authority of India, the company’s revenue stood at Rs 25.32 crore for the quarter ended June 2017, a shade less than half of the Rs 52.43 crore it reported in the corresponding quarter last year.

However, the subscriber base of the company increased by 6.92% from 3.2 million to 3.4 million. Airtel, the country’s largest telecom service provider, has shown a decline of 26.28% in adjusted gross revenues from the state.

Its earnings fell from Rs 1,598.19 crore in the quarter ended June 2016 to Rs 1,178.13 in the quarter ended June 2017.

However, its subscriber base in the state, the highest among all competitors, increased by 7.59% to 22.6 million.

RComm has witnessed the second highest decline, with revenues dropping by 28.40% from Rs 100.81 crore to Rs 72.18 crore.

The company has also seen a massive decrease of 10.37% in its subscriber base. Its wireless subscribers declined from 5.9 million to 5.3 million, TRAI data reveals.

The state-owned BSNL has seen a minuscule 0.04% decline in its subscriber base to 7.02 million.

Its earnings declined by 9.22% to Rs 108.52 crore in the quarter ended June.

Vodafone’s earnings dropped by 14.9% during the period, from Rs 375.25 crore to Rs 319.34 crore.

Idea Cellular, slated to merge with Vodafone, showed the lowest decline in its adjusted gross revenues, at 8.05% during the period.

The company collected Rs 259.4 crore from the Karnataka circle in the quarter ended June.

Vodafone and Reliance Jio declined to comment on their revenues. As we go to press, Airtel had not responded to queries.

More stress ahead

Experts say the sector will face further stress.“Since Jio has been using pricing as an entry strategy, the other operators will have to follow in order to sustain market share. This is expected to impact their debt servicing capabilities,” Arpita Pal Agrawal, leader, telecom, PwC India, said.

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