Telecom sector's revenue growth picked up to about 5 per cent in the September quarter against 1 per cent in the June quarter after relaxation of lockdown curbs, according to a latest report.
Bharti and Jio gained market share from Vodafone Idea, while Airtel continued to "outperform" on key operating metrics, Jefferies has said in a recent note.
"During 2QFY21, aggregate revenue growth for the top-3 operators picked up to 5 per cent quarter on quarter versus 1 per cent quarter in quarter in 1QFY21, largely due to relaxation of lockdown," Jefferies added.
Seen quarter-on-quarter, Bharti Airtel reported the highest revenue growth at about 7 per cent sequentially, against Jio's 6 per cent and Vodafone Idea's (VIL) 1 per cent.
Bharti's operating metrics continue to outperform, it observed.
"While gross subscriber additions picked up for all three operators quarter on quarter, fall in churn levels helped Bharti outperform peers on net additions during 2Q. Notably, VIL's gross adds remain depressed since December-19 tariff hikes," it said.
In its report on Monday, BofA Securities said trends in the second quarter of FY2021 indicated that Bharti gained market share, on the back of 7.4 per cent sequential growth.
"In our view SIM consolidation was a primary driver which benefitted Bharti the most in this quarter. Bharti showed 13.9 million net adds," BofA said.
For Jio, net customer additions stood at 7.3 million during the quarter, while Vodafone Idea lost 8 million subscribers.
"A worrying factor for VIL in our view is that data/voice traffic on its network declined 4 per cent/4 per cent versus other telcos showing increase. This shows impact from users churning and also indicates less engagement (implying secondary SIM)," BofA Securities note added.
It further anticipated that VIL would need to "lead" the tariff hike given a weak balance sheet.
"Bharti and Jio are likely to be the followers but unlikely to lead any tariff hike given their better competitive positioning," it said.
Before deciding on timing of tariff hike, Vodafone Idea could consider certain factors including consumer sentiment and thereby ability to absorb tariff hike without much down-trading risks; and VIL's improvement in network quality and accordingly churn going down (else it could lose more subscribers).
"With VIL in 2Q call claiming that network integration is done and its speeds are fine we believe tariff hikes could be in next 3-4 months (earliest being around Diwali)," BofA report said.
The next events to watch out for in the telecom space include Jio smartphone, auction, and VIL fund raise, it added.
In its report, Goldman Sachs said incremental revenue growth for telcos in the near term will continue to decelerate without a tariff hike.
"...We expect a tariff hike before the end of this year," it said.
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