Data traffic grows, but telecom operators like Airtel, Idea far from happy

NEW DELHI: Growth in data traffic is far from compensating top telecommunications operators for their floundering voice business, even as increasing usage of apps to make calls and Reliance Jio Infocomm's imminent launch further add to their woes. In an industry where competition seems to be returning in full fury, the companies are unable to raise tariffs to cushion the impact.
Bharti AirtelBSE -1.51 % and Idea CellularBSE -3.74 % both posted higher year-on-year net profit in the fourth quarter ended on March 31. But the former, India's No. 1 telecom operator, posted its first sequential profit fall in six quarters while missing estimates by a long way. Idea, the country's third largest, met the lower end of analyst estimates.
The standout theme for both was the struggling voice business, which accounts for more than 80% of overall revenue. Revenue per minute (RPM) for AirtelBSE -1.51 % and Idea continued to drop sequentially, this time dropping by 2.4% and 3%, respectively. Revenue from data grew, though on a small base.
"It's clear that voice margins and revenue are decreasing, but data growth isn't adequately compensating for revenue loss from voice," said Rajan Mathews, directorgeneral of the Cellular Operators Association of India, an industry body representing GSM-based operators such as Bharti Airtel, Idea Cellular and Vodafone India.
On a voice call, a telecom operator earns about 35-36 paise a minute. But, if the caller is using a mobile app to make the same call, the company gets just about a fifth, or around 7 paise, at current tariffs for data usage.
In a recent report, Bharti Airtel said at current revenue realisation, every 1% of voice minute that is substituted by a call through an app would lead to a Rs 1,200 crore revenue loss to the industry.
A fall in their return on investment to a single digit could "shortchange network investments" that operators need to make to expand and deepen data networks, Math"It's clear that voice margins and revenue are decreasing, but data growth isn't adequately compensating for revenue loss from voice," said Rajan Mathews, directorgeneral of the Cellular Operators Association of India, an industry body representing GSM-based operators such as Bharti Airtel, Idea Cellular and Vodafone India.
On a voice call, a telecom operator earns about 35-36 paise a minute. But, if the caller is using a mobile app to make the same call, the company gets just about a fifth, or around 7 paise, at current tariffs for data usage. In a recent report, Bharti Airtel said at current revenue realisation, every 1% of voice minute that is substituted by a call through an app would lead to a Rs 1,200 crore revenue loss to the industry.