India telcos will probably have us believe that they can have both ? subscriber growth and ARPU increase, but we don?t think that they can. For example, the typical argument for 4G ARPU runs like this ? a customer who embraces 4G tends to consume so much more 4G data than she would have done on 3G/2G that her ARPU should significantly rise with 4G adoption (Idea/Bharti have cited this in their earnings calls).
Meanwhile, there are still new 2G subs to be had for user growth. What does 4G evidence from the other markets in Asia (China/Taiwan among Asia EMs and Singapore/Hong Kong/Korea among Asia DMs) tell us about this?
With the sole exception of Korea, significant 4G adoption in other Asian markets hasn?t helped blended ARPUs. Even as the 4G sub base of China Mobile has skyrocketed to ~38% of total sub-base within 8 quarters from its 4G launch in early 1Q14, blended ARPUs have declined materially. The same could be seen with 4G penetration in other markets as well.
Idea and Bharti reported data realization decline of 17% and 13%, respectively. Even on Q/Q basis, data realizations decreased 5-6% for both the players.
Vodafone India reported data consumption growth of 64% Y/Y, while data revenues increased just 38% Y/Y ? a 26% point spread between data consumption and revenue growth (up from 20% last quarter due to continued pressure on data realizations). Idea suggested that there is further downside to data realizations due to continued competitive pressure. Notably, RJio is yet to launch commercial operations, which could put further meaningful pressure on data realizations.
