Indian telecom carrier Idea Cellular and its rival Bharti Airtel indicated drop in messaging revenue component – primarily due to OTT players — in the first quarter of fiscal of 2014. But significant mobile data income growth assisted them to thwart OTT impact.
Both Sunil Mittal-promoted Airtel and the Aditya Birla group firm Idea Cellular are yet to share their concerns on OTT in public. But there are special cases. In one of the recent quarterly analyst meets, Idea Cellular CEO admitted that OTT is a challenge. Two Chinese carriers China Telecom and China Mobile have added them to their hit list.
Airtel is the most affected due to OTT impact. Bharti Airtel’s messaging and VAS revenue component to mobile service reduced to 5.6 percent in Q4 FY 2014 from 6.1 percent in Q3 FY 2014 and 9.1 percent in Q4 FY 2013. It is an alarming signal though Airtel is scoring from data revenue. Presence of OTT players is helping telecoms to add data revenue in a big way. Data component of Airtel rose to 11.1 percent in Q4 FY 2014 from 10.3 percent in Q3 FY 2014 and 6.5 percent in Q4 FY 2013.
In the case of Idea Cellular, a major 3G operator, the non-data (messaging) revenue component to service revenue dropped to 6.4 percent in Q4 FY 2014 from 6.6 percent in Q4 FY 2013 and 8.6 percent in Q4 FY 2013. Data percentage to service revenue rose to 10.1 percent in Q4 FY 2014 from 9.5 percent in Q3 FY 2014 and 6.6 percent in Q4 FY 2013.
Airtel, Idea focus on 3G and 2G mobile data
Airtel India said its 3G subscriber base increased 16 percent to 10.98 million in Q4 FY 2014 from 9.48 million in Q3 FY 2014.
Idea Cellular’s 3G subscriber base rose to 10.2 million in Q4 FY 2014 from 8.7 million in Q3 FY 2014 and 5.1 million in Q4 FY 2013.
Total data user base of Bharti Airtel India increased 7 percent to 58.07 million from 54.42 million.
Airtel data usage rose 20 percent to 46,690 million MB. Data usage per user grew 11 percent to 277 MB. Airtel data ARPU increased 5 percent to Rs 79. Total ARPU increased 1 percent to Rs 196.
Idea Cellular 3G ARPU dips
Idea Cellular’s data subscribers decreased to 25.25 million from 25.52 million. Data volume rose to 27,299 million MB from 20,840 million MB. Out of this, 3G data grew to 13,084 million MB from 9,469 million MB. While data ARPU of Idea Cellular increased to Rs 104 from Rs 91, its 3G data ARPU dipped to Rs 111 from Rs 112.
Interestingly, data ARPU of Idea Cellular (Rs 104 per month) is significantly higher than Airtel’s data ARPU (Rs 79 per month).
Both Airtel and Idea are focusing on ramping up their 3G sites.
Bharti Airtel’s 3G sites increased to 31,301 from 28,179. The number of overall telecom sites grew to 138,755 from 137,069.
On the other hand, Idea Cellular said its 3G sites expanded to 21,381 from 19,904. Idea Cellular total number of sites increased to 104,778 from 101,600.
Can Indian telecoms rival OTT?
Several messaging players are increasing their focus on India. To celebrate 400 million registered users worldwide, LINE is offering paid stickers worth Rs 4,000 for free to its Indian users.
“We have seen users increasingly exchanging and consuming a range of visual content on the app and Stickers have been unbeatable when it comes to content download statistics. The numbers reflect that users are keen on using Stickers into their conversations far more and would continue to do so,” said Daman Soni, India Head of Business Development, LINE.
Telecoms need to hike Capex
Recently, Bharti Airtel CEO Gopal Vittal indicated about a mobile tariff increase in coming months. Indians are ready to pay more if telecoms can improve coverage and stop call drops. Indians should not face challenging situations even when they are taking their calls in their home. Indian mobile users do not want to go their windows and adjust their phones to improve clarity of their voice calls.
Capex by Indian telecoms are too small for an emerging telecom market like India. Idea Cellular is spending Rs 3500 crore as telecom investment and its small rival Videocon Telecom will invest Rs 1300 crore. It is time for investment to improve quality and coverage.
Baburajan K
editor@telecomlead.com
