Sunday, May 1, 2016

Will Internet Access Revenues Grow Fast Enough to Offset Voice Revenue Declines in India?

Bharti Airtel, Idea Cellular and Reliance Communications experienced flat voice revenue and struggled with  data revenue growth in the first quarter of 2016, illustrating the “demand side” of the Internet access supply problem, as well as the ongoing difficulties in the key voice business.

Simply, demand for Internet access, though growing, might not be growing fast enough to offset perhaps-accelerating losses in voice revenue. That fundamental problem is faced by most mobile operators in most markets.

According to a report published by securities firm Kotak, "4G uptake has been slow and is unlikely to help the surprisingly slow momentum of data volume growth."

Kotak analysts expect Bharti Airtel’s  India wireless revenue to grow 3.6 percent sequentially.

Goldman Sachs analysts are more optimistic, expecting Airtel total revenue to grow 6.1 percent year over year.

Credit Suisse expects average revenue per user to dip two percent in 2016, to Rs 194 from Rs 198, year over year.

Idea Cellular is expected to report a  41 percent to 54 percent fall in consolidated net profit for the quarter, at least in part because of spending on spectrum.

Goldman Sachs, however, expects consolidated revenue to grow nearly 12% on-year toRs 9,390 crore, helped by strong subscriber additions and overall growth in wireless business.

Morgan Stanley expects Idea to report 5.2 percent quarter over quarter growth in revenue, as well as 6.6 percent sequential growth in earnings (EBITDA).

Reliance Communications s expected to report a year over year fall of 37 percent to 70 percent in net profit, largely on reduced voice revenue.

Share of recurring revenue by type
source: GSMA

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