NEW DELHI
:
Vodafone Idea Ltd’s revenue market share declined to an all-time low of 14.5% for the quarter ended 30 September 2024, as it lost share in all circles despite having reported revenue growth for consistent quarters.
Market leaders Reliance Jio Infocomm Ltd and Bharti Airtel Ltd gained at the expense of the country’s No. 3 telco as their revenues grew by 14% and 18%, respectively—higher than the sector’s 13% revenue growth, showed Jefferies’ analysis of Telecom Regulatory Authority of India (Trai) data.
Vodafone Idea’s investments in networks may be able to arrest the rapid decline in the market share in the coming quarters, but until those investments are completed, market leaders will continue to take share away from the Aditya Birla Group-backed telecom services provider.
“VIL’s 2QFY25 market share was 150bps lower vs FY24, and at 14.5%, it is at an all-time low. Considering only partial flow-through of tariff hikes, VIL is likely to continue witnessing growth, which may arrest the pace of market share gains for Bharti/Jio in the future,” said Jefferies’ note seen by Mint.
Vodafone Idea intends to spend ₹50,000-55,000 crore over the next three years to improve its 4G networks across the country and launch 5G services in key circles.
A recent government waiver on submitting bank guarantees is expected to help the carrier get bank loans of about ₹35,000 crore during this fiscal year.
Vodafone Idea’s net revenues grew 2% on-year to $4.7 billion in the second quarter, despite a 9% decline in the average active subscriber base to 180 million. It lost 140-160bps share in the more urban-centric metros, A- and B-circles, and 50bps market share in C-circles. Metros, A, B and C are categories of telecom circles or regions based on population or consumer base and revenue generation propensity.
Competitors’ gain
The market shares of Airtel and Jio rose by 140bps and 50bps on-year, respectively. Airtel, which reported the highest revenue growth of 17.6% on-year to reach $12.7 billion, saw the bulk of market share gains in Delhi, Tamil Nadu, and Bihar. The No. 2 carrier’s market share, however, shrank by 20bps in UP (E).
Aitel’s average revenue per user (Arpu) grew by 15%, the highest among peers. At ₹230 as of September end, it had the highest Arpu among the three.
Jio’s revenue grew 14% on-year to $14 billion, while its Arpu grew 8% to ₹213.
Jio’s market share gains were more broad-based, though it lost 20bps share in Delhi. “Notably, Bharti gained ~190bps market share from both Vi and Jio, in C-circles, suggesting traction on its rural expansion strategy. Bharti maintained its market share leadership in metros and A-circles, reflecting its strength in urban-centric markets,” Jefferies added.
Telecom sector revenues rose by 13% on-year to a ‘new peak’ of $32 billion during the quarter, driven by the partial flow-through of tariff hikes in June. Arpu grew by about 12% on average to ₹211.
Jefferies expects the sector revenues to grow at a 14% compound annual growth rate to $38 billion by 2025-26 and $33 billion in 2024-25 from $29 billion in 2023-24, as the full flow-through of the tariff hikes comes into effect.
The sector’s Arpu levels are expected to rise to ₹194 in 2024-25 and to ₹222 in 2025-26.
