Bharti Airtel and Reliance Jio Drive Growth in Telecom Industry's AGR.

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Bharti Airtel and Reliance Jio Drive Growth in Telecom Industry's AGR.

Team Finance Saathi

24/Apr/2024

Key Points:

Quarterly Growth: The telecom sector experiences a significant 1.88% sequential growth in adjusted gross revenue (AGR), reaching US$ 8.14 billion (Rs. 67,835 crore) in the October-December quarter.
Driving Forces: Bharti Airtel and Reliance Jio spearhead the growth, fueled by their expansion into 5G services, while BSNL sees a rise in AGR for mobile services. Vodafone Idea faces continued decline amidst financial challenges.
Impact and Implications: Mobile services dominate the AGR contribution, with Bharti Airtel and Reliance Jio showing notable increases, leading to heightened collections in license fees and spectrum usage charges (SUC) for the Department of Telecommunications (DoT).

In the dynamic landscape of India's telecom industry, the October-December quarter witnessed a remarkable upswing, marked by a 1.88% sequential growth in adjusted gross revenue (AGR), soaring to US$ 8.14 billion (Rs. 67,835 crore). This surge, a testament to the sector's resilience and adaptability, was chiefly driven by industry giants Bharti Airtel and Reliance Jio, both aggressively expanding their foothold in the promising realm of 5G services. However, amidst this buoyant atmosphere, the contrasting fortunes of various players paint a nuanced picture of the sector's trajectory.

Bharti Airtel and Reliance Jio: Pioneers in 5G Expansion

Leading the charge in the telecom arena, Bharti Airtel and Reliance Jio emerged as the primary catalysts behind the industry's robust growth. Bolstered by their strategic foray into 5G services, both telecom behemoths showcased impressive quarterly performances, propelling the overall AGR to new heights.

For Bharti Airtel, the quarter spelled a 3.22% surge in quarterly AGR for licensed services, soaring to US$ 2.46 billion (Rs. 20,480.58 crore). This substantial growth underscores the company's unwavering commitment to innovation and customer-centric solutions, further solidifying its position as a frontrunner in the fiercely competitive telecom landscape.

Similarly, Reliance Jio witnessed a commendable 2.67% rise in quarterly AGR, reaching US$ 2.98 billion (Rs. 24,862.85 crore). Leveraging its cutting-edge technology and expansive infrastructure, the company continues to redefine the contours of India's digital revolution, setting new benchmarks for connectivity and accessibility.

BSNL's Resurgence and Vodafone Idea's Struggles

Amidst the backdrop of industry giants' stellar performances, state-run Bharat Sanchar Nigam Ltd. (BSNL) showcased a notable resurgence, experiencing a significant rise in AGR for mobile services. Bolstered by its concerted efforts to modernize infrastructure and enhance service delivery, BSNL's quarterly AGR for access services grew by 2.31%, amounting to US$ 241.5 billion (Rs. 2,011.84 crore). The company's ambitious rollout of 4G services, powered by a domestically developed telecom stack by TCS, underscores its commitment to spearheading India's digital transformation.

Conversely, Vodafone Idea grappled with ongoing financial challenges, reflected in a 0.65% decline in quarterly AGR, totaling US$ 895.3 million (Rs. 7,459.08 crore). Despite its recent US$ 2.16 billion (Rs. 18,000 crore) follow-on public offer, the company continues to face an uphill battle against mounting debt and intense market competition. As it navigates these turbulent waters, Vodafone Idea's future trajectory remains uncertain, with stakeholders closely monitoring its strategic maneuvers and operational decisions.

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Dominance of Mobile Services and Regulatory Implications

Within the telecom ecosystem, mobile services emerged as the undisputed frontrunners, contributing a staggering 82.07% of the total AGR. This dominance, fueled by surging demand for connectivity and digital services, underscores the pivotal role played by mobile operators in shaping India's digital future.

The robust performance of Bharti Airtel and Reliance Jio not only signifies their market dominance but also translates into tangible benefits for the regulatory framework. With increased AGR, collections in license fees and spectrum usage charges (SUC) for the Department of Telecommunications (DoT) witnessed a notable uptick, rising by 2.01% to US$ 652.1 million (Rs. 5,433 crore) and 1.06% to US$ 101.4 million (Rs. 845 crore), respectively, quarter-on-quarter. This influx of revenue underscores the symbiotic relationship between industry growth and regulatory oversight, highlighting the pivotal role played by stakeholders in fostering a conducive environment for sustained development and innovation within the telecom sector.

Conclusion

As India's telecom industry continues to evolve amidst rapid technological advancements and shifting market dynamics, the October-December quarter stands as a testament to its resilience and adaptability. Led by industry stalwarts Bharti Airtel and Reliance Jio, the sector witnessed robust growth, propelled by the expansion of 5G services and surging demand for mobile connectivity. However, amidst these triumphs, challenges loom large, as exemplified by the struggles of Vodafone Idea and the imperatives of regulatory oversight.

As stakeholders navigate these uncharted waters, collaboration and innovation will emerge as the bedrock of sustainable growth and development. By leveraging emerging technologies, fostering inclusive access, and embracing regulatory reforms, India's telecom sector is poised to chart a course towards a digitally empowered future, where connectivity knows no bounds and opportunities abound for all.

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Bharti Airtel and Reliance Jio Drive Growth in Telecom Industry's AGR.

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