Consumer spending on mobile services dips sequentially in Q4

KOLKATA: Consumer spending on mobile services in India slumped sequentially in the fourth quarter of FY24, which was reflected in lower revenues for telecom operators from their postpaid services business as well as reduced payouts for data services, according to an assessment collated by the telecom regulator.

User spending on mobile services (post-GST) increased by a modest 1.4% sequentially to about Rs 55,524.5 crore in the fourth quarter of FY24--44% lower than the 2.5% sequential growth clocked in the third quarter of FY24—as per latest sector performance data issued by the Telecom Regulatory Authority of India (Trai).

According to analysts, the sequential dip in postpaid service revenue in the fiscal fourth quarter was caused by rising sales of low-value M2M (machine-to-machine) SIMs or `connections’.


“Postpaid net revenue was down 1.9% QoQ (quarter-on-quarter) to around Rs 5,089 crore in Q4FY24, while postpaid ARPU (average revenue per user based on net revenue) was also down 0.7% q-o-q to Rs 188, probably on rising (sale of) M2M SIMs, which have a much lower ARPU,” ICICI Securities said, analysing Trai’s telco consumer spends data.

As per industry estimates, the ARPU from an M2M connection is Rs 40-50, or about a fourth of mobile ARPUs. Typically, M2M SIMs are embedded in machines like smart metres and usually sold in bulk by operators.

Overall consumer spending on data services also rose merely 1.4% sequentially to Rs 48,222 crore — well below the 3.4% on-quarter growth reported on this count in the third quarter of FY24.

Reduced consumer spending on mobile broadband services in Q4 of FY24 translated into the combined 4G/5G data subscribers market shares of Reliance Jio and Bharti Airtel remaining almost unchanged at 54.1% and 29%, respectively, as per Trai data.

Vodafone Idea (Vi), which is yet to launch 5G services, saw a 20 basis points dip in its 4G data subscribers market share to 14.5% in the January-March period, underlining continuing challenges in competing effectively with its two bigger rivals.

Sectoral ARPU--based on lower consumer spending on mobile services--rose merely 0.7% QoQ to Rs 159, well below the 1.8% sequential uptick on this score in the December quarter of FY24.

Latest Trai data, though, showed that net telecom sector revenue growth in the fiscal fourth quarter was higher at 8.7% year-on-year than the 8.5% year-on-year rise in consumer spending on mobile services, as the rise in inter-company settlements between telcos was lower at 4.4% y-o-y (vs 20.5% in Q3 of FY24).

Inter-company settlements, typically, include payments towards roaming charges and international interconnect usage charges (global IUC) that are settled among operators, partner global carriers. Inter-company settlement is the difference between gross revenue (GR) and adjusted gross revenue (AGR) from mobile services.

Trai data indicated that the rise in Airtel and Jio’s customer upgrades to 5G services continued in the fiscal fourth quarter. For instance, the 5G segment contributed nearly 17% of total data usage in Q4 of FY24 (vs 12.6% in Q3 of FY24) while 4G’s contribution fell to 82.5% (from almost 87% in Q3 of FY24). The 2G and 3G user segments, in turn, continued to account for a paltry 0.1% and 0.6% of overall data usage levels, respectively. Jio and Airtel’s 5G user bases stood at 108 million and 75 million, respectively, in the quarter ended March 2024.