Bharti Airtel has reported monthly usage of 11 GB per user, overtaking Reliance Jio in data consumption, according to India Ratings and Research.

The rising share of high-ARPU data subscribers along with rising data traffic and stabiliaing data tariffs augur well for future revenue growth for Airtel.

The credit profiles of telecom operators will remain under pressure in the medium term due to the competitive intensity, elevated debt levels and reliance on capital infusion for debt servicing and Capex.

Indian telecoms revenue recovery may continue at a slower pace, as the proportion of high ARPU subscribers in the data and broadband (3G+4G) categories continues to be low at 40-44 percent and 30 percent, respectively, of overall subscriber base.

After falling steadily over the last 2.5 years, data tariffs expressed in terms of GB per user per month rose 11 percent-17 percent during October 2018-February 2019, and has been stable since then.

Reliance Jio’s data tariffs remain at a discount of 25-30 percent to Bharti / Vodafone Idea; this has enabled Reliance Jio to continue to garner market share aggressively, signalling that competitive pressure has not yet subsided.

The average revenue per user (ARPU) for Bharti Airtel and Vodafone Idea increased by 17-19 percent quarter on quarter in Q4.

The likely recovery in profitability may not be sufficient to address credit concerns such as high leverage, elevated Capex, sustained negative free cash flow and the imminent need for asset monetisation.

Bharti Airtel and Vodafone Idea lost 50 million and 88 million subscribers, respectively, between March 2019 and September 2019 due to the implementation of minimum recharge plans in Q3. The removal of low ARPU / incoming-only customers led to a sharp rise in their ARPU.

For Bharti Airtel and Vodafone Idea, the proportion of data subscribers in total subscribers increased to 41-44 percent in Q4 from 28-33 percent in Q1. The share of broadband (3G+4G) also increased to 31-33 percent in Q4 from 17- 22 percent in Q1.

Telcos would rely on external funding arrangements to support their debt servicing and Capex needs.

Reliance Jio has spun-off its fiber and tower assets into separate special purpose vehicles (SPVs).

Bharti Airtel and Vodafone Idea have concluded rights issues of INR 250 billion each. The pipeline for asset monetisation remains strong, with the initial public offering of Bharti Airtel’s Africa business and fiber/tower monetisation of Vodafone Idea.