A customer at a Vodafone store in Mumbai. Photo: AFP

After facing a long spell of predatory competition from Reliance Jio, legacy mobile phone service providers Vodafone Idea and Bharti Airtel seem to have turned a corner.

According to data released by the Telecom Regulatory Authority of India, Vodafone Idea in January added 1.7 million wireless customers, a feat it has never attained since the merger of Vodafone India and Idea Cellular in August 2018. At the time of merger it had 408 million users, but has been facing a constant exodus of subscribers. In January its user base was 286 million.

Vodafone Idea has also scaled up its investment in 4G technology and its thrust toward migrating its existing 3G customers to 4G has paid off. In the October-December quarter, Vodafone Idea saw an additional 3.6 million 4G subscribers to 109.7 million and data volumes sequentially grew 3.4%.

Though Reliance Jio continues to be the market leader with 410.7 million users, Bharti Airtel has been leading in subscriber additions for the sixth straight quarter. In January, it had added 5.6 million users, against Reliance Jio’s 2 million. Bharti Airtel now has a user base of 344.6 million.

As for active subscribers, Bharti Airtel continued to be the leader with 97.44%, or 335.8 million, active users at the end of January 2021. Reliance Jio had only 79.01% (324.5 million) active users, whereas for Vodafone Idea it was 89.63%, or 256.3 million users.

In terms of average revenue per user, Bharti Airtel is a market leader. In the third quarter ended December, Bharti Airtel generated a revenue of 166 rupees per user, while for Reliance Jio it was 151 rupees and Vodafone Idea 122 rupees.

In 2016, the Indian telecom sector suffered a major disruption after Reliance Jio entered the market and resorted to predatory pricing. This forced other operators to lower their tariffs and many found it was no longer sustainable.

Many companies either had to shut down or be taken over as their margins had been so badly squeezed. Only three companies survived – Reliance Jio, Bharti Airtel and Vodafone Idea.

AGR dues

However, both Vodafone Idea and Bharti Airtel face the burden of huge adjusted gross revenue dues as mandated by the Supreme Court. The ruling was the culmination of a dispute between the telecom companies and the telecommunications department over how much money the former should pay in license and spectrum fees.

The telecom companies contended they should pay fees based on the earnings from their core telecom business. But the telecommunications department argued that it should also include earnings from handset sales and other sources of income.

The Supreme Court upheld the telecommunications department’s demand, but last September it permitted telecom companies to clear payments in installments over 10 years, starting from March 31, this year. According to the telecommunications department, Bharti Airtel owes more than 430 billion rupees in dues, while Vodafone Idea has a balance payment of more than 500 billion rupees.

The two companies recently approached the Supreme Court claiming there were arithmetic errors, double counting of revenue, inadmissible deductions and unaccounted payments in the calculation done by the telecommunications department. The case is ongoing.