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Consumer spend growth remains healthy

In Q1FY23, consumer spend on mobile services (post GST) rose 2.9% QoQ / 20% YoY to Rs478bn (Rs1,912bn annualised), aided by part benefit of 20-25% tariff hike taken in Dec’21. Net revenue rose faster at 4.7% QoQ / 23.7% YoY on lower intercompany settlement. Postpaid net revenue rose 4.7% QoQ / 33.2% YoY on rising subscriber (sub) base. Prepaid net revenue grew 4.7% QoQ / 22.7% YoY as ARPU rose 5.5% QoQ / 30.2% YoY to Rs129. 4G sub base expanded 1.8% QoQ (net add: 13.2mn) to 752mn. RJio’s 4G sub market share rose 24bps QoQ to 54.9% while that for Bharti Airtel (Bharti) improved to 27.3%, up 12bps QoQ. FTTH sub growth remains strong at 43.9% YoY for Bharti and 91% for RJio.

The Telecom Regulatory Authority of India (Trai) has released the sector’s performance indicator report for Q1FY23. Key highlights:

* Consumer spend on mobile services (post-GST) rose 2.9% QoQ / 20% YoY to Rs478bn in Q1FY23 and net revenue (deducting inter-company settlements) rose 4.7% QoQ / 23.7% YoY to Rs459bn. Inter-company settlement reduced 26% QoQ which has increased net revenue faster vs consumer spend. ARPU (based on consumer spend) rose 3.2% QoQ / 23.8% YoY to Rs139 (Rs170 including GST) benefiting from price increase taken in Dec’21, and additional day in the quarter. Postpaid net revenue grew 4.7% QoQ / 33.2% YoY to Rs48bn in Q1FY23. Prepaid net revenue rose 4.7% QoQ (22.7% YoY) to Rs410bn. Postpaid ARPU (based on net revenues) dipped 1.5% QoQ (8.3% YoY) to Rs198 and prepaid ARPU was up 5.5% QoQ (30.2% YoY) to Rs129. Prepaid revenue was bolstered by price hike.

* 4G sub-base expanded 1.8% QoQ (13.2mn) to 752mn and RJio’s 4G sub market share rose 24bps QoQ to 54.9% and Bharti’s improved 12bps to 27.3%. VIL’s 4G sub market share dipped 16bps QoQ to 15.8%. Industry-wide, 3G subs continued to decline and were down 1.9mn QoQ to 19mn.

Total sub-base rose 0.5% QoQ (net add: 5mn) to 1,147mn as clean-up of inactive subs by RJio is complete. Postpaid subs rose 4.9% QoQ (net add: 3.9mn, probably from M2M) to 83mn. Bharti’s postpaid sub market share dipped to 21.7% and VIL’s to 24.2%. Market share may not be representative due to more M2M subs add.

* Data usage market share rose 36bps QoQ for Bharti. Data usage grew 4.9% QoQ to 37,626-bn MB led by 4G segment growth of 5% QoQ to 37,098-bn MB (and contributed 98.6% to total data usage). 2G data volume dipped 4.7% QoQ and 3G data volume was down 5.3% QoQ. Bharti and VIL’s data usage market shares were 33.4% (up 36bps QoQ) and 14.4% (down 18bps QoQ), respectively.

Industry minutes dipped 4.6% QoQ to 3,139bn. Bharti’s minute market share rose to 34.4% (up 240bps QoQ) and VIL’s to 14.3% (up 60bps QoQ). RJio’s minute market share rose 335bps QoQ to 39.8%.

* Fixed broadband subs rose 5.3% QoQ (21.8% YoY; net add 1.5mn) to 28.7mn. This was led by 11.8% QoQ / 111% YoY growth in FTTH subs to 21.2mn, while DSL continued to decline (down 9.7% QoQ / 55.8% YoY to 2.8mn). RJio’s market share inched up to 21.4% of total FBB subs while its share of FTTH subs was 29%. Bharti’s market share in FBB was up 260bps to 16.9% despite RJio’s aggression. BSNL’s market share dipped 75bps QoQ to 13.4%.

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