Q2 review: Telecos see lower revenues, subscriber spends

It is a de-rating time for Indian telecom companies. Revenues and profitability have taken a hit and dwindling subscriber spends did help either, reports CNBC-TV18's Kenan Machado.

Per second billing has knocked off the pulse of the telecom sector. With Bharti being the latest to join this bandwagon, it dissapointed the most on the earnings front and gave an indication of troubled times. While revenues declined for the first time on a sequential basis, its wireless EBIDTA margins were down to 31.9% versus 33.05%. Average revenues per user (ARPUs) fell sequentially by 23% at Rs 161 coupled with 6.85% decline in minutes of usage to 340.

Reliance Communications ' numbers were a washout. Its Q2 wireless EBIDTA (Earnings Before Interest, Taxes, Depreciation and Amortization) margins came in at 32.7%. Its ARPU sharply declined to Rs 161 versus Rs 210. Minutes of usage declined to 340 versus 365 minutes.

Tata Teleservices Maharashtra 's Q2 ARPU declined to Rs 148 from Rs 154 and minutes of usage declined to 271 from 292.

Idea Cellular 's EBITDA margin came in at 27.2% led primarily by new circle launches. Usage declined 6% to 375 minutes a month. Its ARPUs, excluding Spice, fell 9.9% to Rs 209 a month.  Sanjeev Aga, MD, Idea Cellular, attributes this fall to pricing pressures and the new dual-SIM phenomena.

The dual SIM phenomena is impacting customer spends. Subscribers are choosing to use a second SIM card to benefit from discounts. Companies like TTSL which launched its GSM service in August, gained share on the back of its one paisa per second proposition.

Mukund Rajan, MD, TTML, says, "This quarter, revenue per minute has gone up from 53 paise a minute to 55 paise a minute largely on the back of the GSM proposition of one paisa per second. In EBITDA terms, we have obviously seen the impact of our GSM launch expenses and our enhanced marketing for launching the new brand." 

If last quarter was marked by the impact of interconnect fees, the pulse phenomena has clearly hurt numbers this quarter.