TRAI’s recently released financial data of adjusted gross revenue ( AGR) of third quarter clearly depict the impact of Reliance Jio’s free offers on incumbent operators and telecom industry. Bharti Airtel , the market leader in Indian telecom space , registered a decline of 8% as its AGR of mobile services dropped from Rs 12493 cr in Q2 to Rs 11495 in Q3. Vodafone’s AGR slipped from Rs 8754.78 cr to Rs 8304.5 cr which is negative growth of 5.1%. Idea Cellular, which posted net loss of Rs 385 cr in Q3 for the first time since it got listed in 2007, saw it AGR fell from Rs 7317.8 cr to Rs 6957.9 cr during the same period even though its subscriber base grew by 11.7 mn highest among existing operators.
Airtel’s subscriber base increased by 2.2% and Vodafone’s by 2% in Q3 but in their attempt to retain customer base against aggressive offers from Jio their margins slipped substantially and this trend is expected to continue in next quarter as well. The impact of increasing competitive intensity is such that even leading operators like Vodafone and Idea Cellular have started holding discussions for merger apart from smaller operators which are not left with any choice but to look for exit options. Recent addition to this list is Telenor which is going to be part of Bharti Airtel.
Interestingly telecom PSU’s BSNL and MTNL reported positive growth in AGR in Q3. BSNL’s AGR enhanced from Rs 2000 cr in Q2 to Rs 2093 cr in Q3 as its subscriber base also increased by 3.2% with more than 3 mn net additions in the quarter. Reliance Communications and Tata Docomo AGR of mobile services dipped by apprx 12.5% while Telenor’s reduced by just under 2%.
Circle wise Performance( AGR Mobile Services ) of Airtel , Vodafone and Idea Cellular- Q2 Vs Q3 FY2016-17
But it is not just existing telecom operators which are losing money in current scenario government also will see its kitty shrink as its revenue is dependent of AGR. Government’s license fee is based on revenue share and as telecom industry’s revenue and margins witness a dip it will also stand to see some fall in license fee collections. In fact it has been reported that Telecom Commission , the highest decision making body of Indian Telecom, questioned TRAI for allowing Reliance Jio to continue offering free voice and data for prolonged duration which is having negative impact on overall health of telecom industry.