Voda Idea loses revenue in circles where network integration is over: Report

Telecom operator Vodafone Idea has lost revenue share in most of the circles where the merger of the two mobile networks has completed, according to a report by JM Financial.

Vodafone India and Idea Cellular started integration of their networks after completing their merger on August 31, 2018.

They have repeatedly expressed confidence of improving performance after their merger and integration of their network.

The report said that during the first quarter of the current financial year, Vodafone Idea Ltd (VIL) saw quarter-on-quarter (q-o-q) revenue market share (RMS) erosion in all circles, except Himachal Pradesh.

"In fact, in the 10 circles where the two mobile networks have been integrated, VIL lost RMS in all but one circle; in the remaining 12 circles, VIL's q-o-q RMS loss was generally higher," the report said.

The highest RMS loss for VIL was observed in the Metro and A circles, specifically Delhi, Maharashtra, Tamil Nadu, Andhra Pradesh and Mumbai.

"VIL has lost its leadership position in Metro circles of Kolkata and Delhi, but has maintained leadership in Mumbai by a large margin. Finally, VIL's RMS (based on gross revenue) continues to be over 50 per cent in Kerala circles, but it may drop below 50 per cent over the coming quarters," the report said.

JM Financial said Reliance Jio, which became the largest operator in the country during the June 2019 quarter, gained at the expense of VIL and smaller telecom operators.

"On our current outlook (with assumption of a four-player market including state-run telecom firms), we see Jio's RMS moving up to 41-42 per cent level in financial year 2021, Bharti Airtel's holding on to 28-29 per cent, helped by Tata Teleservices acquisition, and VIL's RMS settling at around 25 per cent," the report said.

Mukesh Ambani-led Reliance Jio surpassed Bharti Airtel and Vodafone Idea in the April-June period as top revenue earner from telecom services at Rs 10,900 crore in three years of commencing commercial operations, according to the latest financial data released by telecom regulator Trai.

Bharti Airtel and Vodafone Idea recorded adjusted gross revenue (AGR), earned from the sale of telecom services, of Rs 10,701.5 crore and Rs 9,808.92 crore, respectively, during the quarter, showed the data released by the Telecom Regulatory Authority of India (Trai).

A Bank of America Merril Lynch report has said it believes VIL would exit the 6 circles in C-Circle where it has been continuously losing revenue market share with share below 20 per cent. The report has identified Himachal Pradesh, Bihar, Odisha, Jammu and Kashmir, North East and Assam from where VIL may exit.