The just-concluded Cricket World Cup may have offered a temporary boost to mobile data usage by over 4 per cent sequentially in the December quarter for the top three telecom companies in India. However, this increase in data usage is likely to lead to only a relatively modest sequential revenue growth of 1 per cent at best.
This is because consumers tend to have large chunks of unused data, making it difficult for them to upgrade to higher value plans. Furthermore, some viewers watched the World Cup action on their smartphones using Wi-Fi rather than mobile data, which further limits revenue growth.
Despite the sluggish revenue growth, there are some positive factors for the sector. The upcoming festive season, assembly elections in multiple states, and the addition of 5G users by Jio and Airtel could potentially increase overall data usage levels by almost 7-8 per cen sequentially. This could drive around 3-3.5 per cent sequential growth in sectoral India mobile revenues during the current quarter.
Prashant Singhal, Emerging Markets, Technology, Media & Telecom leader, EY India, has said that the World Cup factor will have pushed up data usage levels north of 4 per cent sequentially in Q3FY24 for the top three telcos. However, it’s likely to at best trigger only around 1 per cent revenue upside on-quarter for them, as data packs typically tend to be under-utilised, which limits the possibility of consumers upgrading to higher value packs.
The top three telecom companies collectively reported 3 per cent and 2.4 per cent sequential growth in India mobile revenues in Q1FY24 and Q2FY24, respectively, according to company data.
However, sectoral analysts are optimistic that the festive season and the slew of assembly elections in multiple states, coupled with 5G user additions by Jio and Airtel and extra days during the October-December period, could boost overall data usage levels by almost 7-8 per cent sequentially, which in turn could drive around 3-3.5 per cent sequential growth in sectoral India mobile revenues during the current quarter.
In recent times, sporting events like the Indian Premier League (IPL) cricket tourney had boosted telcos’ data usage levels in the fiscal first quarter. Jio and Airtel had reported 8 per cent and 4.2 per cent sequential growth in average monthly data usage per user to 25 GB and 21.1 GB, respectively, further helped by the rapid uptake of 5G. Even without 5G, Vi had reported 3.82 per cent sequential growth in data usage to 16.04 GB in the June quarter as feature phone users had upgraded to 4G devices to catch the IPL action live.
Sectoral analysts suggest that mapping digital viewership trends during the cricket World Cup with the earlier IPL event is not strictly an apples-to-apples comparison. Digital viewership during the cricket World Cup likely peaked only in the big matches featuring India, in some major matches involving other top teams and the final, unlike during an IPL event where the viewership level was largely consistent throughout the 20-overs competition.
Peeyush Vaish, partner and TMT industry leader at Deloitte India, expects sporting events like the month-long World Cup to have definitely “given a boost” to the sale of smartphones in the current quarter, since Disney Hotstar had live-streamed the World Cup cricket action that could be accessed on-the-go on all mobile networks.
Even as Jio and Airtel prepare to roll out 5G services nationally in a few months, brokerage CLSA estimates India’s smartphone base growing 14.3 per cent on-year to 600 million by end-FY24. This suggests that despite the current challenges, the mobile industry in India remains poised for growth.