Telecom - Consumer spend rose despite lockdown - ICICI Securities

In Q1FY21, consumer spend (post GST) rose 0.2% QoQ / 16.6% YoY to Rs356bn despite the Covid shock and non-availability of offline recharges for a few weeks. Postpaid net revenues (down 8.8% QoQ) were worst impacted likely due to job losses and corporate cost-saving measures. Prepaid was more resilient with net revenue decline of just 1% QoQ largely due to lower subs-base while ARPU was flat QoQ at Rs84. 4G subs-base grew slower at just 1.9% QoQ (net add: 12.1mn subs) to 646mn due to lower shipment of smartphones. RJio's 4G subs market share rose 40bps QoQ, but fell 250bps YoY to 61.5%. Bharti Airtel has been gaining market share in data usage, which rose 30bps QoQ / 520bps YoY to 28.5% (significantly narrowed gap with its AGR market share, which is a positive).

The Telecom Regulatory Authority of India (Trai) has released the sector's performance indicator report for Q1FY21. Highlights:

- Consumer spend (post-GST) rose 0.2% QoQ / 16.6% YoY to Rs356bn in Q1FY21 despite Covid shock and net revenues (deducting inter-company settlements) declined 2.0% QoQ / rose 19.8% YoY to Rs320bn. ARPU (based on consumer spend) rose 0.7% QoQ / 18.1% YoY to Rs103 (Rs126 including GST) on tariff hikes taken in Dec'19. Postpaid net revenues dipped 8.8% QoQ / 19.3% YoY to Rs35bn in Q1FY21, and were most impacted due to job losses and cost-cutting by corporates. Prepaid net revenues declined only 1% QoQ (up 28% YoY) to Rs275bn on non-availability of offline recharges. Postpaid ARPU (based on net revenues) fell 8.2% QoQ to Rs224 and prepaid ARPU was flat QoQ at Rs84. Prepaid revenues benefited from shift from 2G to 4G, which offset some of the lockdown-related weakness.

Data revenues (not comparable on YoY basis due to reclassification of rental revenues) rose 4.6% QoQ to Rs274bn (77% of consumer spend). Outgoing voice revenues declined 17.7% QoQ to Rs64bn.

- 4G subscriber base grew 1.9% QoQ (12.1mn net add) to 646mn and RJio's 4G subs market share rose to 61.5% (up 40bps QoQ) while Bharti Airtel's dipped 10bps to 21.4%. VIL's subs market share shrunk 50bps to 16.2%. 3G subs continue to decline fast and were down 2mn QoQ to 32mn. In the mobile broadband category (including 3G and 4G), RJio still enjoys 58.6% subs market share.

Total subs-base contracted 1.5% QoQ (net lost: 17mn subs) to 1,141mn driven by postpaid subs, which dropped 4.2% QoQ (net lost: 2.3mn subs) to 52mn. Bharti 's postpaid subs market share rose to 28.3%, up 90bps QoQ, while that for VIL reduced to 41.8%, down 90bps.

- Data usage market share rose 30bps QoQ for Bharti Airtel. Data usage grew 11% QoQ to 25,369-bn MB led by 4G segment growth of 11.3% QoQ to 24,387-bn MB (and contributed 96.1% to total data usage). 2G data volume rose 2.8% QoQ and 3G data volume was up 3.4% QoQ. Bharti Airtel and VIL's data usage market shares were 28.5% (up 30bps QoQ) and 17.8% (down 10bps QoQ) respectively.

Industry minutes dipped 1.3% QoQ to 2,565bn. Bharti Airtel's minute market share improved to 32%, up 30bps QoQ, while VIL's stood at 22.6%, down 115bps QoQ. RJio's minute market share rose 90bps QoQ to 34.7%.

Source : Equity Bulls

Keywords