Going by the words of analysts and experts, the second-ranked Sunil Mittal Bharti led telecom operator Airtel and Reliance Jio Infocomm, the latest entrant in the industry might race ahead of the top telecom operator of India, Vodafone Idea, by the end of 2019. As per an ET Telecom report, Bharti Airtel will surpass Vodafone Idea in 2019 in terms of revenue market share on the basis of a robust 4G network. The experts have also chipped in saying that the current market leader’s focus will be on integrating the two companies. They have further added that with the companies pursuing a goal of higher average revenue per user (ARPU), the industry marker might witness a rise too. More data consumption attributing to an election year is also a considerable prospect.
Experts Predict a More Stable Industry in 2019
The analyst maintained their position and said that the industry would also witness stability in 2019 as Reliance Jio has already amassed 275 million subscribers and nearly 27% RMS signalling a slowing in its intensity of customer acquisition. The Cellular Operators Association of India (COAI), however, is of a different opinion and believes that the competition and pressure of declining ARPU will trouble the sector in 2019 also.
Nitin Soni, director (corporates) at Fitch Ratings said about this, “Airtel and Jio could end up holding roughly 33% RMS each by end-2019, while Vodafone Idea’s could drop below 30% by end-2019 from its near 33% level now, as the latter is likely to face network integration challenges and not be in a position to offer 4G services comparable with either Jio or Airtel.”
The Telecom Regulatory Authority of India (Trai) also collected data concerning this issue which highlighted that Airtel’s RMS stood at 30.9% (343.5 million users), which is a decline of 0.75% points from the previous quarter. Reliance Jio’s RMS, on the other hand, was up to 26.1% (over 252 million users). Vodafone Idea boasted an RMS of 32.8% (437.5 million subscribers. scribers), witnessing a decline of 190 bps.
Vodafone Idea's Capex Spend to Present Major Hurdle for the Telco
Soni further said that VIL might have a tough time in the coming year as it probably won’t be able to match the level of capex spends which Airtel and Reliance Jio will carry over in 2019. To balance this out, Vodafone Idea is already plotting some strategies. The company plans to raise Rs 25,000 crore via equity infusion and selling of its fibre assets. However, the experts believe that this might not be enough.
To recall, the intense data tariff war snowballed after the introduction of very competitively priced plans by Reliance Jio, back in September 2016. The data tariff war eroded revenue from the industry and forced a lot of players to take an exit. This war was also the reason for the merger of Vodafone and Idea. However, experts have asserted that with the industry now resting in the hands of three major players, there is going to be stability in the pricing in 2019. Sanjiv Bhasin, executive vice president (markets & corporate affairs), IIFL, said he expects “pricing power to return in 2019” as he sees “Jio focusing more on revenue.”
Also, 2019 being an election year is yet another critical factor which will contribute to revenue for the telcos. According to the analysts, the data traffic will rise 20% year-on-year in 2019, and a lot of feature phone users are expected to migrate to smartphones thus increasing revenues. Fitch Ratings’ Soni also expects a 5-10% year-on-year industry ARPU growth in the next 12 months from the current Rs 100-105 level attributing to the new minimum recharges rolled out by telcos.
