Consumer spending on mobile services rises 20% in June quarter on tariff hikes

Consumer spending on mobile phone services increased 20% year on year to 47,800 crore in the quarter ended June 30, data from sector regulator Trai showed, largely due to the tariffs introduced by telcos in November 2021.

Trai’s quarterly performance reports come with a delay. Major carriers reported their results for quarter ended September earlier this month.

An increase in data usage across the consumer base combined with an increase in the number of 4G users to 752 million also helped, despite a drop in talk time minutes. Higher revenues led to higher average revenue per user (Arpus) for telcos.

“Intercompany settlement reduced 26% quarter, which increased net income faster against consumer spending. Arpu (based on consumer spending) rose 3.2% quarter and 23.8% year to 139 ( 170 including GST) benefiting from price hike taken in Dec’21, and an additional day in the quarter,” said analysts at ICICI Securities. For the quarter ended June 2021, the Arpu was 112. Consumer spending comes to 1.91 trillion for FY23, analysts said.

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Net income, derived after removing intercompany settlement amounts, comes to 45,860 crore for the quarter ended June, of which the prepaid segment contributed 89.5% and postpaid 10.5%. Prepaid customers form approximately 95% of the telcos’ total customer base of over 1.14 billion users.

Postpaid revenues increased 33% to 4,820 crore on the back of increased subscribers while prepaid revenue rose 22.7% to 41,040 crore for the industry in the quarter ended June, against the same quarter in the previous financial year.

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The positive growth was also reflected in Arpus for the prepaid segment increasing 30.2% per year to 129. But postpaid Arpu declined 8.3% to 198 per year, in the same comparative period.

Reliance Jio, the country’s largest telecom service provider, benefited the most from the expanding 4G subbase as it added 24bps to its subscriber market share in the quarter ended June, raising it to 54.9%. Bharti Airtel improved its share by 12bps to 27.3%. Vodafone Idea’s 4G subscriber market share fell 16bps to 15.8%. As of June 2022, Jio had 413 million 4G subscribers, followed by Airtel with 205 million subscribers and Vodafone Idea with 119 million 4G subscribers.

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Accordingly, the market shares of data usage for telcos have also risen, with Jio having the highest share of 55%, followed by Airtel and Vodafone Idea at 33.4% and 14.4% shares.

Industry-wide, 3G subscribers continued to decline, falling by 1.9 million to 19 million, as telcos continue to close 3G sites and move subscribers to 4G networks. 3G data volume fell 5.3% quarter-on-quarter, while 2G data volume fell 4.7% quarter-on-quarter.

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