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CLSA on Reliance Jio, Bharti Airtel and Vodafone Idea | Big reveal on Telecom Sector

Zee Business logo Zee Business 25-11-2020 (Zee Business)
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Telecom sector revenues up 33% from lows; In Q2 FY21, Reliance Jio’s revenue share was unchanged at 38% and Bharti Airtel was at 32%. Among markets, metros, which were most impacted by Covid-19 led lockdowns, had the highest revenue growth at 11% QoQ. CLSA sees Bharti Airtel as well placed to play sector’s growth with 4G penetration at 52% of its subscribers and leading ARPUs. Vodafone Idea has lost 22 ppt share from peak. TRAI data reveals sector revenues during Q2 FY21 were up 26% YoY / 5% QoQ and are up 33% from lows of Q4 FY19. Vodafone Idea’s share loss decelerated to 40 bps QoQ, but it has lost 22 ppt revenue market share from peak.

Sector revenues up 26% YoY/5% QoQ:

As per latest TRAI (regulator) data, during Q2 FY21, India mobile revenues grew 5% QoQ (up 26% YoY) as Covid-19-led country wide lockdowns continued to ease. Bharti Airtel reported 4% QoQ revenue growth while growth for Reliance Jio was highest at 5% QoQ also with delayed flow through prepaid tariff hikes of Dec-19. Vodafone Idea (VIdea) which was most impacted by the Covid-19-led lockdowns lagged peers with a lower 3% QoQ revenue growth. Sector revenues are up 33% from lows of Q4 FY19 but are still 6% lower vs Q1 FY17

Reliance Jio’s unchanged 38% share:

 In Q2 FY21, top-three operators accounted for 91% of sector revenues, with Reliance Jio leading the industry with 38% revenue share. Reliance Jio’s Q2 FY21 revenue share was unchanged QoQ, but up 3 ppt YoY, while Bharti Airtel’s share at 32% was although down by 40 bps QoQ but up 1 ppt YoY. Market share shift away from Vodafone Idea continued this quarter with it losing 40 bps QoQ / 6 ppt YoY to 20.9%. Vodafone Idea has lost 22 ppt revenue market share from the peak.

Metros see return of revenues:

Metros, which were most impacted by Covid-19-led lockdown in previous quarters, have seen highest revenue growth, up 11% QoQ in Q2 FY21. Growth in Metros has been led by Vodafone Idea which saw a 22% QoQ growth; however it reported a 3% QoQ decline in A-circles which accounts for 44% of its revenues. In Q2 FY21 Bharti Airtel witnessed 3-5% QoQ growth across all markets and Reliance Jio too saw a 4-6% QoQ growth across markets and maintained 38% market share.

Revealed | Market share shifts to continue:

Over the last 12 months, Vodafone Idea has lost 6 ppt market share (40 bps in Q2 FY21) and in 21 of 22 circles pan-India. Also Vodafone Idea is worst affected by the AGR judgement; however it has renewed marketing post rebranding and has an improving 4G network. Meanwhile CLSA remains positive on Reliance Jio and sees Bharti Airtel as well placed to play the sector’s growth with 4G penetration at 52% of its total mobile subscribers and ARPU 12-24% ahead of peers

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