License fee dips by 9.62% in Qtr ending Dec’16

Reliance Jio’s aggressive pricing strategy to garner new consumers with slew of free offers has been great news for Indian mobile users but that has lead to decline in telecom industry’s revenues and subsequently license fee. As per latest data released by TRAI in ‘The Indian Telecom Services Performance Indicators ‘ for qtr ending Dec 2016 Adjusted Gross Revenue (AGR) of the industry for the quarter ending Dec’16 slipped by 9.17% compared to AGR in quarter ending Sep’16. Industry’s AGR dropped from Rs 50,539 cr in Sep’16 quarter to Rs 45,905 cr in Dec’16 quarter. This has lead to decline in license fee as it slipped by 9.62% . Government earned Rs 4091 cr as license fee in Sep quarter compared Rs 3698 cr in Dec quarter. Spectrum usage charges ( SUC ) also dropped from Rs 1868 cr to Rs 1639cr in the same period as the industry prepares for consolidation to reduce capex , protect existing revenue and survive the onslaught of  intensive competition unleashed by Reliance Jio. License Fee AGR DEC 2016

Gross Revenue (GR) quarterly declined by 6.79% in QE Dec’16,however, on annual basis, it has increased by 1.81%. Access services contributed 81.22% of the total Adjusted Gross Revenue of telecom services. In Access services, Gross Revenue (GR), Adjusted Gross Revenue(AGR), License Fee and Spectrum Usage Charges(SUC) declined by 8.09%, 10.55%, 10.92% and 12.29% respectively however, Pass Through Charges increased by 0.38% in QE Dec-16.

AGR ACCESS SERVICES DEC 2016

With continuous extension of Reliance Jio offers such decline was expected and it was also reflected in the financial results of incumbent operators. And it is because of these reasons TRAI finally woke up to the negative impact of free offers by Jio and advised the new operator to discontinue Summer Surprise offer. Earlier incumbents operators raised their voices against such free offers but TRAI justified them and when government realized that these offers are going to have negative impact on its revenues as well it disallowed recent Summer Surprise offer from Jio . As per recent reports telecom industry’s total debt stood at 4.85 lakh cr and any drastic decline in revenues and profitability of existing operators revenue will affect their ability to pay debt and deferred spectrum payments to banks and government respectively.

As per the data Bharti Airtel, the market leader in Indian telecom space, witnessed decline of AGR of 7.98 %  sequentially . Its AGR dropped from Rs 12493.18 cr in Sep quarter to Rs 11495.66 cr in Dec quarter.Vodafone, Idea Cellular and BSNL registered decline of appx 5% during the same period.

AGR-DEC 2016

 

In this quarter there was net addition of 77.63 mn subscribers and total wireless (GSM+CDMA) subscriber base increased from 1,049.74 mn at the end of Sep-16 to 1,127.37 mn at  the end of Dec-16, registering a quarterly growth rate of 7.40% over the previous quarter. The year-on-year (Y-O-Y) growth rate of wireless subscribers for Dec-16 is 11.52%.

Total number of Internet subscribers has increased from 367.48 mn at the end of Sep-16 to 391.50 million at the end of Dec-16, registering a quarterly growth rate of 6.54%. Out of 391.50 million, Wired Internet subscribers are 21.51 million and Wireless Internet subscribers are 370.00 mn. The broadband Internet subscriber base grew by 22.77% from 192.30 mn at the end of Sep-16 to 236.09 mn at the end of Dec-16. On the other hand, the narrowband Internet subscriber base declined by 11.29% from 175.18 mn at the end of Sep-16 to 155.41 mn at the end of Dec-16.

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Zainul lbad is a management graduate and tech enthusiast. He shares keen interest in exploring mobile gadgets, telecom technologies and applications.