Revenue Market Share, the measure of overall telecom market leadership, in the light of VI’s inability to invest adequately in the 4G network shall witness growth for telecom behemoths like Reliance Jio and Bharati Airtel.
According to analysts, Jio and Airtel had over 72% RMS. By June end, the two companies gained 60 basis points and 120 bps. Their respective revenue share levels were 38% and 34%. On the other hand, Vodafone Idea (VI) lost 180 bps and reduced its RMS to 19%.
Further, the analysts explained that VI’s extended balanced sheet might speed things up for Jio and Airtel’s revenue shares. If the government provides any other relief, it would be an edge for JIO and Airtel. However, it would challenge the regulatory dues, not the fresh 4G CAPEX.
The telecom companies have sought relief from the government for reduced telecom impositions, elongated lease periods, and better payment rules for statutory dues. They asked for such efforts to sweeten the financial soundness of the debt-laden telecom sector.
However, analysts referred to it as a tall order as VI still hasn’t closed its ₹25,000 crores funding. The strict future payouts towards NCD redemptions (non-convertible debenture), AGR dues and spectrum purchases could lead to a $3.1 billion cash shortfall for VI.
While VI’s revenues decreased by about 5% in the quarter, Jio and Airtel recorded 4 and 2% sequential revenue gains from April to June. Revenue for VI’s June quarter was the lowest in more than two years.
Due to lockdowns, aggregate revenue growth for the top three operators moderated to 1% from April to June. Analysts expect the telecom sector to grow from the current quarter against the backdrop of tariff hikes. Moreover, JIO might continue to increase the customer count after the launch of the 4G smartphone in September.
User consumption worsens with lower network CAPEX and an increase in data traffic. Analysts predict, if funding does not close off, Vi will lose subscribers and give more revenue to Jio and Airtel.
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