Data | Telecom sector on the mend, AGR decision a relief

The redefinition of the adjusted gross revenue to exclude non-telecom revenue and a four-year moratorium on dues may provide a breather to the struggling telecom giants. With Vodafone-Idea and Airtel dragging themselves back from record losses registered in 2019, the fears of a duopoly or monopoly emerging in the sector have been temporarily delayed. And with Jio increasing tariffs lately, the average revenue earned per user is also up, giving a much-needed fillip to the sector.

From 14 players in 2009-10, the telecom sector shrunk to just four in 2020-21. Jio’s quick rise and Airtel’s stagnant growth meant that the fears of oligopoly were fast becoming true. However, Airtel's profits in the last two quarters and Vodafone-Idea’s reduced losses hint at recovery.

Vodafone-Idea and Airtel have recovered significantly in recent quarters from the record losses of ₹510 billion and ₹230 billion, respectively, in Q2FY2020.

Waves of change

The graph looks at how the telecom sector has consolidated after mergers and exits over the past decade. Operators are differentiated by coloured bands. The bigger the band, the more the subscribers at any given point of time.

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Back from record losses

After posting significant losses, Airtel is back in the green for the last two quarters. Vodafone-Idea is still in the red. However, it has recovered from the record losses of 2019. Reliance Jio remains in the green. The graph shows “profit/loss from ordinary activities before tax” in ₹ billion.


Spike in usage

Since Jio’s inception in 2016, both data usage and time spent on calls rose due to extremely low tariffs charged by the company initially. Lately, the movement restrictions imposed during the pandemic increased the data and call traffic further.


Rising revenues

Between 2016 and 2019, despite an exponential rise in subscribers and consequently in data and call usage, the companies’ revenue from those services dropped because both Airtel and Vodafone-Idea reduced their tariffs to arrest the customer outflow to Jio. However, with Jio increasing its charges lately, the revenue earned per user is also on the ascent. However, it is still much lower than the levels seen before Jio’s entry.



Also read: Tariff increase crucial for telcos’ survival: analysts

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Printable version | Oct 20, 2021 10:25:43 PM |

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