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The likely exit of Telenor will result in a windfall to other players in the industry, with as much as ₹3,400 crore in adjusted gross revenue (AGR) up for grabs. Further revenues would also come in due to the winding up of CDMA services, according to a report by brokerage firm ICICI Securities.
However, subscribers of rival operators of Reliance Jio Infocomm have low average revenue per user (ARPU) and pre-dominantly use voice services. Hence, this may not be an immediate addressable market for RJio, the brokerage firm said in an August 24 report.
Telenor India operates across seven circles, which contribute 36 per cent to industry revenue. Telenor’s AGR stood at ₹3,400 crore in FY16. Its AGR market share was 5.7 per cent, and it captured 9.2 per cent of incremental AGR-market share.
The majority of the company’s revenue was from its affordable voice services, and thus it captured 4 per cent industry (pan-India) minutes market share and 7 per cent of incremental minute market share in FY16.
High probability of exit “We recognise the significant operational and financial improvement delivered by our Indian operation. We have however, after thorough consideration, decided not to participate in the upcoming spectrum auction, as we believe the proposed spectrum prices do not give an acceptable level of return,” the company said in its June quarter earnings.
“We will continue our efforts to meet customer demands and grow the business based on the current spectrum holding. As we evaluate our options in India, we will be disciplined on capex,” it had added.
This indicates a high probability of Telenor exiting the India market sooner rather than later.
The top three players will be the major beneficiaries of Telenor’s exit. “While the potential buyer would benefit most, other incumbents may also benefit as Telenor is the second SIM for most of its subscribers due to cheaper outgoing call rates,” the brokerage said.
When contacted a Telenor spokesperson said: “We do not have any comments beyond what the CEO of Telenor Group said during FY2016 Q2 result announcement.“
Idea, a major beneficiary There is an increase in activity around consolidation in the sector. With Telenor’s exit, the second SIM would cease to exist, thus benefiting the primary SIM operator. Among the top three, Idea may be a major beneficiary as it is a strong number two operator in seven circles, with AGR market share of 25.4 per cent.
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