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MOSL: TELECOM: Vodafone India - Muted revenue on continued ARPU pressure; Targets to close merger with Idea before August End

TELECOM: Vodafone India - Muted revenue on continued ARPU pressure; Targets to close merger with Idea before end-August

 

ARPU remains under pressure

Vodafone India reported another weak quarter, with India wireless revenue coming in flat QoQ (-24% YoY) at INR71b. ARPU declined 3% QoQ (-28% YoY) to INR102. Vodafone India’s overall subscriber base fell 1% QoQ to 220m. Management highlighted that the market is now consolidating toward a single SIM with an increase in the penetration of unlimited offering. This has helped the company to maintain its leadership position in the 12 circles where it is the primary operator. The decline in its overall subscriber base can be attributed to the pressure faced in the remaining 10 circles, where it largely holds a single-digit market share and is mostly used as second SIM. It is likely that subscribers have switched to their primary operators in these 10 circles.

 Unlimited plans exert pressure on network, ARPU

Vodafone India reported data revenue of INR16.9b (-5% QoQ) and voice revenue of INR53.8b (up by a marginal 1% QoQ). Unlimited bundled plans were opted by 29% of Vodafone India’s prepaid subscribers, leading to a significant increase of 31% QoQ in its data volume to 1,059b MBs (monthly 353b MBs data traffic, i.e., 21% of RJio’s 4QFY18 numbers). However, incremental data subscriber growth stands at a meager 1% QoQ to 77m (31m 4G subs) due to the deteriorating network (led by increased data traffic from bundled plans and slower-than-expected data network investments).