Vodafone Idea may exit from six telecom circles because its revenue market share has dropped below 15 percent in these markets, according to a report.
A Bank of America Merril Lynch report said Vodafone Idea’s market share has fallen to 15 percent or below in seven circles — all C-Circles. Himachal Pradesh, Bihar, Odisha, Jammu and Kashmir, North East and Assam are these circles. Telcos in the past had indicated they were EBITDA negative in circles with lower than 15 percent market share.
The report said Vodafone Idea may exit from the 6 telecom circles in C-Circle where it has been continuously losing revenue market share with share below 20 percent.
“It remains unclear to us, if Vodafone Idea would continue to invest in these circles if tariffs remain low,” Sachin Salgaonkar and Sukriti Bansal, research analysts at DSP Merrill Lynch India, said.
Vodafone Idea in an official statement said Vodafone Idea remains committed and will continue to serve its millions of customers in circles such as Himachal Pradesh, Bihar, Odisha, Jammu and Kashmir, North East and Assam.
“We categorically deny and dismiss this speculation as completely baseless and factually incorrect,” Vodafone Idea said.
Industry sources said it will not make sense for Vodafone Idea to continue in circles where its revenue market share is below 15 percent because those circles will become EBITDA negative for the operator.
Vodafone Idea earlier indicated that the mobile service provider will start focusing on profitable circles. Vodafone Idea has lost some revenue share due to its focus on removing less-ARPU customers.
There is no official confirmation from Vodafone Idea on the exit of the business or down sizing of the operations. Goldman Sachs earlier revealed that the current cash crisis will force Vodafone Idea to down size its operations in several circles across India. Ravinder Takkar is the new CEO of Vodafone Idea.
The Merrill Lynch report said Vodafone Idea will be more vulnerable to lose market share in a scenario 1) it curtails investments in its networks; 2) exits a few loss making circles / markets.
Latest TRAI report shows that Reliance Jio is now No 1 in India with 31.5 percent revenue market share. Airtel has moved to No 2 position at 29.7 percent by gaining 2.5 pps qoq and Vodafone Idea has fallen to No 3 position at 27.8 percent by losing 4.3 pps market share.
The revenue market share – based on average gross revenue – of Vodafone Idea has reached 5.5 percent in Himachal Pradesh, 9.1 percent in Bihar, 7.8 percent in Odisha, 5.6 percent in Jammu and Kashmir, 12.5 percent in North East and 15.3 percent in Assam during the June quarter of 2019.
Vodafone Idea’s revenue share was 16.7 percent in Karnataka including Bangalore and 14.6 percent in Rajasthan, according to a report from ICICI Securities.
Reliance Jio, promoted by billionaire Mukesh Ambani, is the dominant market leader in Himachal Pradesh with 49.3 percent share, Bihar with 55.8 percent share, Odisha with 53.1 percent share, Jammu and Kashmir with 49.7 percent share, North East with 43 percent share and Assam with 43.8 percent share.
Airtel is the market leader with 49.7 percent share in Karnataka, while Reliance Jio dominates Rajasthan with 52.1 percent share.
Vodafone Idea has lost revenue share in most of the circles where the integration of the two mobile networks has completed, JM Financial said. Vishal Vohra is the chief technology officer of Vodafone Idea, responsible for the integration. Balesh Sharma, the chief executive officer of Vodafone Idea, has already resigned.
Vodafone India and Idea Cellular started integration of their networks after completing their merger on August 31, 2018.
Vodafone Idea earlier said it improved network speed and experience to mobile customers on its network after their merger and integration of their network. The report said that during the first quarter of the current financial year, Vodafone Idea faced drop in revenue market share in all circles, except Himachal Pradesh.
In the 10 telecom circles where the two mobile networks have been integrated, Vodafone Idea has lost revenue share in all but one circle; in the remaining 12 circles, Vodafone Idea’s q-o-q RMS loss was generally higher.
The highest revenue share loss for Vodafone Idea was observed in the metro and A circles, specifically Delhi, Maharashtra, Tamil Nadu, Andhra Pradesh and Mumbai.
Vodafone Idea has lost its leadership position in metro circles of Kolkata and Delhi, but has maintained leadership in Mumbai by a large margin. Vodafone Idea’s revenue share in Kerala may drop from over 50 percent.
Reliance Jio may achieve 41-42 percent revenue market share during financial year 2021. Bharti Airtel will be holding on to 28-29 percent revenue share, helped by Tata Teleservices acquisition. Vodafone Idea will have a revenue share of around 25 percent, JM Financial said.
Reliance Jio will have market share of 45 percent by fiscal year 2022, from 30 percent as of March, India Ratings and Research, a unit of Fitch Group, said. Bharti Airtel and Vodafone Idea will have market share of 25-27 percent.