Idea Cellular, which is the third-biggest mobile operator in the country declared its earning on 8 August 2016 and it points to a very disturbing picture. It is beyond doubt that the sector is witnessing a slowing of data growth. The fact must not have escaped the big players in the market and could be one of the reasons for a deluge of freebies being offered by most mobile operators. Both Bharti and Idea are offering more data at the same price in a bid to coax or lure the consumers to increase usage.
Idea 2nd quarter earnings:
Idea’s earning in the April to June quarter has been well below expectation. Data volumes rose by 13.24% quarter-on-quarter and stood at 93,127 million MB during the period. In terms of rate of growth it is showing a slowing trend. In the opening quarter of 2015, data volume grew by 19.11%.
However in the opening quarter of 2016 it increased by 14.98%. Consolidated profits of the Birla group company also fell in the quarter to Rs. 217 crores a steep decline of 62.29% sequentially. The revenues were also stagnant and stood at Rs. 948.66 crores. The situation has been blamed on some factors including increasing costs and waning consumer interest.
The phenomenon is not isolated to Idea but is universal as seen with the results of its rival, Bharti Airtel which declared its earnings on July 27.
The data volume growth of Airtel was even worse and stood at 7.68% during the period was the slowest in the last eight quarters. In the first quarter of 2015, the data volume growth was 19.1% while in the first quarter of 2016 it slid to 17.76%.
Bharti has also started making amends improve the situation and has offered more data for the same price to lure consumers. However more than coaxing the existing subscribers to increase data usage it will be imperative to attract more customers to use the web.
Bharti has made its offering, first unveiled in August 2015 more attractive and is now offering unlimited voice calls and 1GB data for a flat rate of Rs.1, 199 instead of the earlier Rs.1, 999 per month.
Operators have another worry, a decline in realization from data. Idea Cellular’s realization was 21.1 paisa per MB of data while it was 22.31 paisa for Bharti. The launch of Reliance Jio is just round the corner and the slowing down of data growth does not augur well for the telecom industry as it will result in an ugly battle for customer poaching.