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In a clear indication that India’s telecom market is heading towards a duopoly, Vodafone Idea’s revenue market share has dipped sharply to 21 per cent during the June quarter, nearly half of what it was in FY17. Market share shifts continued towards Reliance Jio and Bharti Airtel with both operators gaining 470 basis points (bps) and 200 bps market share versus their FY20 levels to 38 per cent and 33 per cent, respectively.
“Vodafone Idea's revenue market share losses are no longer just being driven by its weaker markets. During Q1, 60 per cent of Vodafone Idea’s 5.8 percentage point (ppt) market share loss came from its top-3 markets that form 35 per cent of its revenues. The company lost 10 ppt market share in Maharashtra, 13 ppt market share in Kerala and 8 ppt market share in Gujarat driven by 22-47 per cent QoQ decline in net revenues in these markets. Notably, Reliance Jio has seen the highest growth in each of these markets,” said a note from Jefferries equity research.
“Vodafone Idea saw sharp market share decline in metros and A-Circles, the key urban markets. Given that these markets have higher dual-sim users, it seems subscribers are consolidating their usage/spends away from Vodafone Idea in these markets,”it added.
This comes even as Vodafone Idea is struggling to stay afloat given the massive AGR dues and other existing debt. The future of Vodafone Idea is still uncertain with the Supreme Court putting off a decision on allowing more time to pay the AGR dues. But even if the apex court agrees to allow 20 years to make the payments, Vodafone Idea may find it difficult to compete with the cash-rich Reliance Jio. There are multiple headwinds facing the operator. Vodafone Idea is still playing catch-up with Reliance Jio and Bharti Airtel when it comes to 4G network roll-out. Even if the ₹53,000-crore AGR dues have to be paid over 20 years, the operator’s balance sheet will be highly leveraged to make fresh investments into network roll-out or acquiring fresh spectrum. “Vodafone-Idea’s magnitude as well as the nature of its market share loss in Q1 is a reminder that sector consolidation is far from over and the market is moving steadily towards a duopoly,” Jefferies said.
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