Telecom sector showed recovery in FY14, Idea biggest gainer- Trai

NEW DELHI: India's telecom industry revenue grew 10.1 per cent in the last fiscal year ended March, compared with 8.6 per cent in the previous fiscal, as per sector regulator data, underlining the recovery in the sector which has seen improved voice pricing after a prolonged period of brutal competition which had pushed call rates to all-time lows.
For the fourth quarter ended March 31, Idea Cellular, India’s No. 3 operator, gained revenue market share (RMS) the most to be at 16.6 per cent, a rise of 90 basis points from a year earlier.

Bharti Airtel, India’s No. 1 carrier, however had the most RMS at 30.5 per cent, a rise of 50 bps while second largest operator Vodafone India added 40 bps to end the quarter with 23.4 per cent share of industry revenue.

The fact that the top three operators had a combined RMS of 70.4 per cent in the fourth quarter and accounted for 91 per cent of incremental industry revenue in the fiscal year indicated that the weaker operators were consistently losing ground, setting the stage for much needed consolidation, analysts said.

Of the smaller operators, Norwegian Telenor’s local unit, Uninor, gained RMS at the cost of other small operators.

"Over the last year, the big three operators have gained RMS in most of the 22 circles - Idea in 19, Bharti in 16 and Vodafone India in 15 - while Tata (Teleservices), BSNL and RCOM (Reliance Communications) have lost RMS in 21, 18 and 18 circles” respectively, Kunal Vora, an analyst at BNP Paribas, said in a note.

He added that the top three operators were increasing their RMS in many key circles such as Madhya Pradesh, Kerala, Mumbai, UP (W), Maharashtra and Delhi where the smaller players were struggling to hold on to their respective shares.

"We expect this trend to continue and drive industry consolidation as smaller operators, which are losing RMS, may find it unviable to operate, especially when they are faced with auction determined spectrum price," Vora said.

"The stronger operators have acquired fresh spectrum, in addition to retaining their existing spectrum."

Analysts said that while spectrum payments related to the previous and upcoming auctions will weigh on the profitability of Bharti Airtel and Idea, their operating growth will continue to be driven by rising voice revenue per minute and data usage.