At Vodafone Idea, revenue market share and cash are depleting fast

Vodafone Idea Ltd may be India’s largest telecom company by subscriber base, but it also happens to be the smallest in terms of revenue market share among private sector operators

In the June quarter, Vodafone Idea was the only company to post a sequential decline in revenues, while competitors Bharti Airtel Ltd and Reliance Jio Infocomm Ltd reported notable expansion. This is based on quarterly revenue data from the Telecom Regulatory Authority of India (Trai) compiled by SBICAP Securities Ltd.

Based on adjusted gross revenues, including receipts from long-distance services, Vodafone Idea’s market share dropped from 32.1% in the quarter ended March 2019 to 27.8% last quarter. Two years ago, the combined market share of Vodafone India and Idea Cellular stood at 42.5%.

SBICAP Securities estimates Vodafone Idea’s revenue market share to stabilize at around 20% in the medium term, with Reliance Jio seeing further gains by the end of FY20. At the end of the June quarter, Reliance Jio’s revenue market share stood at 31.5%.

While Bharti Airtel’s market share was similar, according to Trai numbers, analysts said Jio achieved clear market leadership in the June quarter. Airtel’s numbers reported to Trai may need some adjustments, they added.

What’s more, the hit from the reduction in interconnection usage charges to zero in a few months will make things worse for the incumbents.

The drop in Vodafone Idea’s market share and operating performance comes at a time when its balance sheet is fast deteriorating. An analysis of its debt and repayment schedules, based on the latest annual report by Kotak Institutional Equities, shows that the company may fall short of funds in about a year from now.