The story in Live Mint starts with revenue shares. The Big Three (Bharti Airtel, Vodafone and Idea) now have 70 percent of revenues. But what caught my eye was what was going on on the data side.
Again the numbers can be used to illustrate this: As the uptake of data, the next growth driver for the industry, increases, the big three GSM incumbents are again poised to gain disproportionately. All three players have over 90% active customers, and also enjoy subscribers of higher quality, as reflected in their average monthly revenue per user numbers, which are higher than their peers in the industry.
“Idea’s management highlighted in the post Q1FY14 result conference call that 3G networks are currently running at 10-15% capacity and hence have a significant upside in terms of utilization. As data consumption per subscriber grows (driven by video and heavy application-based usage), 3G uptake might improve. Thus, utilisation of the 3G network (which has sunk costs) would improve, which in turn would cannibalize 2G data, leading to fewer capacity concerns on the 2G network. Furthermore, data carriage on 3G is more efficient than 2G, leading to better economics for the operators,” analysts Ankur Rudra and Utsav Metha at Ambit said in a 28 August report titled ‘Telecom – Deep Dive’.
The Ambit report further dispels fears that growth in data traffic (18-21% compounded quarterly growth rate in the last four quarters for Bharti and Idea) may force these operators to invest in additional capacity to maintain growth. “These fears may be misplaced, as capacity is not currently a problem for the operators who are largely focused on coverage-based capex. Capex guidance already factors in the current levels of growth in data, and vertical expansion and ICR (3G roaming) agreements could limit the upside risk to additional capex,” the report added.