Industry Update Back
Telecom : Vodafone's revenue growth stabilizes
21-Jul-2017

  • Wireless revenue stabilizes after two quarters of decline:Vodafone India's wireless revenue grew 1% QoQ (declined 15% YoY) to INR89b. Revenue stabilized after last two quarters of 6-7% QoQ decline. ARPU dropped 1% QoQ(and 20% YoY) to INR141. Launch of commercial offerings by RJio has arrested the revenue decline, as subscriber usage is recovering. This has offset the ARPU decline seen on the back of unlimited usage fixed-price plans.
  • Voice revenue stabilizes:Voice revenue stabilized, with a 1% QoQ growth toINR67.6b, led by 1.4% subscriber growth to 212m, partly offset by voice ARPU decline of 1% to INR107.
  • Data volumes record significant leap:Data revenue grew just 0.4% QoQ toINR21.3b, 24% of total revenue. Data volumes grew 84% QoQ, steered by unlimited usage plans. The monthly data usage per customer surged 78% QoQ to 1.1GB, but this was offset by 45% QoQ decline in data price to INR90/GB.
  • Expect sequentially stable revenue for Bharti and Idea in 1QFY18:Vodafone's sequentially steady revenue indicates that incumbent telcos like Bharti and Idea should also see revenue stabilization in 1QFY18, on the back of voice and data volume recovery, partly offset by the decline in ARPUs due to unlimited offerings.
  • Capex to be postponed to FY19:The Vodafone-Idea merger is expected to conclude by FY18. Until then, we expect both Vodafone and Idea to soften cape   x spending. Our channel checks indicate that post-merger, both network restructuring and fresh capex will accelerate, as complementary networks of both the companies will be synergized.
  • Expect market share dilution until the merger:We continue to believe that both Vodafone and Idea operate on weak competitive footing. Until the merger,it might be challenging for them to retain their market share. However, beyondFY19, better data network should strengthen their competitive position and arrest market share dilution.