New Delhi: Digital offerings represent a “growing area of investment” for every telecom company, with Reliance Jio leading the way, according to an analyst report.
While Jio is building or partnering for these offerings, Airtel and Vodafone Idea are largely going to opt for the partnership route, Morgan Stanley said in a recent note.
“Digital offerings…this is a growing area of investment for every telco, with Jio leading the way. music, movies, financial services, video conferencing solutions, etc have already been launched by Airtel and Jio, and we see these getting enriched,” it said.
The report ‘takeaways from Q1 results’ on Indian telecom industry pointed out that the June quarter trends diverged across Average Revenue Per User (ARPU), subscriber and 4G ads.
“Airtel and VIL stressed partnerships and digital offerings; Jio talked about 5G, low-cost smartphones, and developing its digital ecosystem,” it said.
The Adjusted Gross Revenue (AGR) verdict is keenly awaited and may dictate the future of Vodafone Idea, ARPUs, and funding needs, said the Morgan Stanley report dated August 7.
The quarter showed some impact from nationwide lockdowns with respect to recharges, gross adds, and lower roaming revenues.
While Vodafone Idea reported ARPU of Rs 114 (5.8 per cent lower compared to March quarter), the earning per subscriber for Airtel jumped to Rs 157 (up 1.9 per cent sequentially), and Jio to Rs 140 (up over 7 per cent sequentially).
With smartphone shipments returning to pre-COVID levels, migration from 2G to 4G should somewhat normalise in the second quarter of fiscal, the report said.
“Data usage rose across networks, reflecting higher consumption during the lockdown,” it said. While VIL’s financial situation is the “most delicate”, Jio and Airtel are in a comfortable liquidity position.
On home broadband and enterprise offerings, it said Jio has laid out ambitious plans in the past, and Airtel and VIL are focusing on the segment, as well.
“Airtel is meeting home broadband demand in unwired cities by partnering with LCOs (Local Cable Operators) in 14 cities. It believes that the enterprise opportunity is large and that it can grow there because it has deep relationships across large enterprises and SMEs (Small and Medium Enterprises) for offerings such as data centers, IoT (internet of things), cloud, cybersecurity,and managed services,” it said.