There isn't one driver of this we think, and is a combination of poor networks, low smartphone penetration, limited apps (video usage) and perhaps even low propensity to pay for usage too ? but this generally tends to lag networks and apps. Competition amongst telcos too has kept a lid on yields too, we think.
Data penetration in India is around 25%, which is amongst the lowest in the region despite 3G being around for over four years now. Data revenue growth rates are moderating somewhat ? IDEA?s data revenues grew by 45% y-y in 3Q16 vs 90%+ a year back (some of this is due to higher base effect too.) For the 9 months ending December 2015, volumes are up ~70% (by total MB on network) and revenues up ~60% (pure data revenues).
We think the softness is a combination of various factors, which include: inadequate network quality, low smartphone penetration, telcos? focus being more on driving growth than yields, and competition. As per Gartner and other industry sources, the growth of smartphone shipments in India slowed to 23% in 2015 from 88% in 2014, but the growth in 2014 came from a lower base. Nevertheless, on an absolute basis, the increase was lower at 22mn units in 2015 vs. 36mn units in 2014 despite the availability of low-cost smartphones.
