Airtel still seems to be the favourite among many. Even though competition has gone up manyfold in the telecom industry with the entrance of Reliance Jio Infocomm, analysts believe Airtel will maintain market share.
According to global market research firms Goldman Sachs and Elara Capital, Airtel continues to grow its market share amidst intense competition.
They expect it to maintain market share as smaller telcos bear the brunt.
“While the overall revenue for the industry has declined 24 per cent as average revenue per user (ARPU) fell sharply (19.8-21.1 per cent) due to free promotional period by RJio, we believe ARPU can improve over financial year 2019-20 for the leaders (Airtel, Vodafone and Idea),” Elara Capital said in its latest report.
It said the three companies will benefit from both elasticity in data usage and consolidation of subscriber identification module (SIM) by their users (resulting in higher wallet share from their customers).
Short-lived advantage“We note RJio’s low-cost VoLTE phone is targeting a monthly ARPU of ₹153, 71 per cent higher ARPU than the March 2017 national average of ₹89.3,” it said adding that RJio’s cost advantage may not last longer and its ₹349 plan is not acting as a ceiling for individual subscriber ARPU for Airtel and Vodafone.
“While it might intuitively make sense for all users with monthly spend above this level to switch to RJio or demand an equivalent plan from their existing providers, it ignores some factors like uncertain service levels in terms of parameters, such as signal coverage in remote areas,” it said.
Goldman Sachs’ report said the wireless revenue growth for incumbents have seen double digit year-on-year (YoY) declines in the past two quarters, as they responded to Jio by lowering pricing, in some cases by as much as 90 per cent.
“However, in this declining market, Airtel has been increasing its revenue market share, which at 34.1 per cent (as of March 2017) is at an all-time high,” it said. According to the Goldman Sachs report, RJio, which has announced sale of JioPhone from next month, the handset is unlikely to remain a competitive advantage for the company.
“We believe the target market for Jio, which comprises customers that pay more than than ₹100 ARPU and buy feature phones of more than ₹1,000, is likely to be fairly small, and could actually be less than 100 million subscribers. We do not think content will lead to a competitive advantage for Jio.”