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Table of Contents
Industry goes back five years this fiscal in terms of revenues
The pre-Reliance Jio era saw the industry grow at 12-13% on-year from fiscals 2014 to 2016. Post a ~20% and ~10% declinein fiscal 2018, CRISIL Research expects the industry's adjusted gross revenue (AGR) and gross revenues (GR) to declinefurther by 8-10% and 16-18% respectively, in fiscal 2019, reaching below fiscal 2013 levels.
However, the corrosive effect of competition will see the AGR of the top three players (Bharti Airtel, Idea Cellular, andVodafone India) decline by 18-20% on-year during the fiscal. The onslaught of cheaper voice and data tariffs will lead to thisdecline as incumbents focus on retaining subscriber market share by matching the cut-down in pricing of the new entrant. Thekey monitorable to the revenue remains the pricing of newer packs, especially in the postpaid segment that accounts for 5-6%of the wireless subscribers.
Rural tele-density likely to cross 60% by fiscal 2019
The wireless-subscriber base stands at ~1,146 million in June 2018, an on-quarter decline of ~37 million. This is attributed toexit of smaller players such as Telenor and Aircel from the industry. In addition, high urban tele-density led to low netsubscriber addition from urban areas. CRISIL Research believes only 70-75% of the subscribers the smaller players lostmigrated to the larger players. The balance 25-30% moved out of the industry; most of them are believed to be dual SIM usersin urban areas, who switched to using only their primary SIM card.
We expect the wireless subscriber base to reach 1,195-1,200 million in fiscal 2019. The net addition is expected to be slowerduring fiscals 2019 owing to the likely decline in the subscriber base for Vodafone-Idea post the merger. Majority of thesubscriber addition will be in under penetrated rural areas with rural tele-density of 57.63% as of June 2018. The rural teledensityis expected to cross 60% this fiscal.