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<ul><li> VIL lost market share in 14 circles whereas JIO gained market share in these circles. </li><li> Jio’s revenue market share is at 31.7% which is in striking distance of <keyword id="15492" type="CITY" weightage="20" keywordseo="Vodafone">Vodafone</keyword> <keyword id="41511" type="CITY" weightage="20" keywordseo="idea">Idea</keyword>’s 32.2%. </li><li>CARE recently downgraded VIL’s long-term debt to A- from AA-, with a negative outlook. </li></ul>What does it mean to be the top telecom service provider in India? The finish line in the race between Jio, Vodafone Idea (VIL), and Airtel is at the halfway mark. Mukesh Ambani’s Reliance Jio is looking to attain a 50% share in the total telecom sector’s revenue. The company that brought in predatory pricing is looking to bite off half of the telecom pie, which will probably make it powerful enough to alter the pricing structure of the market. Whether they will be able to do it or not will be determined in the next four to five quarters, which is when Emkay Brokerage predicts it will achieve it. Jio’s revenue market share without including national long distance is at 39.8%. Vodafone Idea has a share of 28.9% and Bharti Airtel is at 24% for the fourth quarter. However, when including national long distance, Vodafone is the market leader with Jio close behind. Vodafone is ceding the most of its territory to Jio. “VIL lost market share in 14 circles which contribute 50% of its total AGR (adjusted gross revenue), whereas JIO gained market share in these circles,” said a recent report on telecom sector by Emkay Brokers. What’s more worrisome is that Vodafone Idea is losing share in its traditionally strong circles of Mumbai, Tamil Nadu, Uttar Pradesh-East and Andhra Pradesh. These four leadership circles contribute to 28% of the merged company’s revenues. In the meanwhile, Jio found a niche in B and C circles, like Madhya Pradesh, West Bengal and Bihar amongst others. Not only does it command number one position in the circles, they contribute to more than half of Jio’s revenue. Yet, Jio is not gaining ground as fast as it did, earlier. “The intensity of RMS gains has decelerated due to slower revenue growth,” Emkay said. A Negative Outlook It is this manner of extreme competition which has worried rating agencies too. CARE recently downgraded its long-term debt to A- from AA-, with a negative outlook. “The negative outlook continues to factor the moderation of operational performance amidst intense prevalent competition in Indian telecom Industry. The competition in the industry has intensified leading to decline in realizations,” CARE said in its report. Improving Margins Vodafone Idea however is setting the stage for improving its margin even in an era where prices for 3G data fell drastically since Reliance Jio’s entry. It introduced a minimum recharge plan of Rs 35 for 28 days, and it lost 53 million subscribers in the fourth quarter. The customers which it lost were those who were using the number for incoming calls only or barely using it. As a result, its average revenue per user (ARPU) went up to ₹104 from ₹89 a quarter earlier. In spite of small victories, Vodafone Idea is a long way from withstanding the onslaught of Reliance Jio’s aggressive tariffs. And Vodafone’s fate will also depend on when, how it will win the price war. “The outlook may be revised to Stable in case it is able to withstand the competition in a more resilient manner and demonstrate improvement in operational and financial performance indicators,” CARE said.

The magic number that Vodafone Idea, Airtel and Jio are chasing is 50

Shares of <keyword id="15492" type="COMPANY" weightage="20" keywordseo="Vodafone">Vodafone</keyword> Idea on Tuesday tanked over 16 per cent due to rating downgrade on <keyword id="8275485" type="UNKNOWN" weightage="20" keywordseo="agr-dues">AGR dues</keyword> and other issues of the company.On the BSE, the stock plunged 14.91 per cent to trade at Rs 2.91 in early market hours. Later it was trading with a loss of 8.77 per cent at Rs 3.12. The scrip plummeted to a low of Rs 2.85, down 16.17 per cent, on the NSE. It was trading 7.35 per cent lower at Rs 3.15. Vodafone Idea on Monday said Care Ratings has downgraded rating on its long-term bank facilities and non-convertible debentures. The downgrade is on account of "significant erosion" in the overall risk profile of the company in the wake of absence of relief on modification plea relating to AGR dues on February 14. It also takes cognizance of recent losses suffered by the company in the quarter ended December. In a separate filing, Vodafone Idea had said its board has authorised the company to immediately pay Rs 2,500 crore, a portion of its statutory dues, to the telecom department on Monday. The company also promised to pay another Rs 1,000 crore before the end of the week. Meanwhile, shares of <keyword id="6354287" type="COMPANY" weightage="20" keywordseo="bharti-airtel">Bharti Airtel</keyword> lost 1.82 per cent to trade at Rs 554.70 apiece on the BSE. Bharti Airtel on Monday said it has paid Rs 10,000 crore to the DoT towards statutory dues. RUJ ANUANU

Vodafone Idea stock tanks 16% to ₹3 after rating downgrade

<ul><li>The board of directors at Vodafone Idea have approved a ₹250 billion fund raising plan.</li><li>This is expected to be the largest ever rights issue in the Indian corporate sector. </li><li>The funds will enable Vodafone Idea to take on market incumbents Jio and Airtel more effectively in terms of capital expenditure and low prices. </li></ul> The board of directors at Vodafone Idea have approved a $3.5 billion (₹250 billion) fund raising plan that will give the recently-merged telecom services behemoth enough ammunition to take on the mighty Reliance Jio, owned by the richest man in Asia, <keyword id="3820" type="PERSON" weightage="20" keywordseo="Mukesh-Ambani">Mukesh Ambani</keyword>. This is expected to be the largest ever rights issue in the Indian corporate sector. In addition to enabling Vodafone Idea to take on market incumbents Jio and Airtel more effectively in terms of capital expenditure, the proceeds of the issuance will also be used to cull Vodafone's debt burden. Nearly two-thirds of the funds to be raised, or about $2.5 billion, will be secured from the promoter group Vodafone and <keyword id="44373" type="COMPANY" weightage="20" keywordseo="Aditya-Birla-Group">Aditya Birla Group</keyword>. Vodafone India's parent will provide $1.5 billion while the Aditya Birla Group will provide the remainder. Furthermore, if any portion of the rights issue is unsubscribed, the promoters will take up the slack. Investors reacted favourably to the commitment of the company's largest shareholders as the shares of the merged entity were up 3.5% when the National Stock Exchange opened this morning. Vodafone owns a 45.2% in the combined entity while the Aditya Birla Group owns 26%. After the completion of their merger last year, Vodafone-Idea, which began operations on 1st September, became India's largest telecom services provider by market share (32%) and subscribers (422 million). However, the entity's growth in revenue and subscribers significantly trails that of Jio and Airtel. In fact, it even lost 6.5 million subscribers between September and October 2018, according to a report by the Telecom Regulatory Authority of India. The funds will help it sustain low prices and match the deals offered by its competitors. Analysts are unsure, however, whether ₹250 billion will be enough for Vodafone Idea to take on Jio, which spent ₹140 billion on capex alone in the quarter ended December 2018. The merged entity might be compelled to undertake another rights issue or a bond sale later in the year. Reliance Jio’s entry into the telecom market in September 2016 had triggered an intense tariff war, driving down the cost of data in the world’s second largest market with over a billion mobile phone subscribers. While customers rejoiced, Jio's competitors were forced to contend with a loss of profitability and market share. Nearly two years into the battle for dominance, Jio with its deep pockets has kept the ante up while many others have bled to irrelevance. SEE ALSO: <a href="https://www.businessinsider.in/idea-and-vodafone-are-a-step-closer-to-becoming-indias-largest-telecom-operator/articleshow/64461224.cms">Idea and Vodafone are a step closer to becoming India’s largest telecom operator</a> <a href="https://www.businessinsider.in/two-years-on-reliance-jio-continues-to-dominate-indian-telecom-market-beating-global-giants/articleshow/67380627.cms">Two years on, Reliance Jio continues to dominate Indian telecom market, beating global giants</a>

Vodafone Idea is readying a $3.5 billion warchest to take on Jio-- and markets are cheering

<ul><li>Jio’s predatory data tariffs are still 25 to 30% lower than that of Airtel and Vodafone Idea. </li><li>Airtel and Vodafone’s joint market share is expected to drop 25% to 27% each. </li><li>The total debt of the top three telecom players — Reliance Jio, Bharti Airtel and Vodafone Idea — is as high as ₹3.9 lakh crore. </li></ul> The telecom war that <keyword id="3820" type="PERSON" weightage="20" keywordseo="Mukesh-Ambani">Mukesh Ambani</keyword>’s Reliance Jio started will rage on for another two years, according to a report by India Ratings. The stress of investments and the lack of revenues due to deep discounting is hurting the entire industry, including Jio. The total debt of the top three telecom players — Reliance Jio, Bharti Airtel and Vodafone Idea — is a massive ₹3.9 lakh crore, according to the report. That’s almost <a href="https://www.businessinsider.in/sensex-today-jumps-150-points-after-rbi-move-to-transfer-surplus/articleshow/70852202.cms">twice the amount the </a>Reserve Bank of India gave the Indian government, which is ₹1.76 lakh crore this week. The debt run up by the three war ravaged players is also almost half of the country’s total fiscal deficit which is<a href="https://www.livemint.com/news/india/fiscal-deficit-crosses-61-of-budgeted-target-in-first-three-months-of-fy20-1564574137744.html"> pegged at around</a> ₹7 lakh crore for 2019-20. Fiscal deficit is the amount of money the government is falling short of, to carry on its planned expenditure. RJio’s market share will go up 40% to 45% It doesn’t look like the debt is going away anytime soon. Jio’s predatory data tariffs are still 25 to 30% lower than that of Airtel and Vodafone Idea. India Ratings expects RJio’s market share to increase 40% to 45% over the next two years. At the end of the last financial year, it stood at around 30%. “Airtel and Vodafone’s joint market share is expected to drop 25% to 27% each,” the report predicted. Jio’s already declared that it’s targeting 50% market share in total telecom revenues, without mentioning a timeline. At his annual general meeting, Ambani promised Reliance Industries’ shareholders of Jio’s growth. The company already has around 340 million customers but is aiming for more. “The potential for growth is immense, and half a billion customers is now well within our reach,” Ambani said. No free cash flow available till 2021-22 As a result of high debt and continuous losses, the telecom players will remain structurally weak for the next two years, says the report. This means they will have no or low free cash in hand. “These companies will continue to rely on refinancing or capital infusion. However, near-term liquidity is supported by large cash levels available post capital infusions (Vodafone Idea, Airtel) and continued financial flexibility due to strong parentage (Jio),” the report said. From here on, there are a few things that can change the fortunes of the flailing telecom sector starting with Jio’s pricing strategy. Any change and possible increase in tariffs and subsequent response by other two players, will pave the way for recovery in the telecom sector. SEE ALSO <a href="https://www.businessinsider.in/the-difference-between-mukesh-ambanis-jio-and-ani-ambanis-reliance-communications/articleshow/70869465.cms">Mukesh Ambani's strategy with Reliance Jio is avoiding Anil Ambani's mistakes with RCom</a>

Top three telecom companies’ debt is at ₹3.9 lakh crore — that’s half of India’s fiscal deficit

As soon as Idea Cellular announced news of <a href="http://www.businessinsider.in/idea-to-merge-with-vodafone-india-time-to-say-hello-to-indias-biggest-telco/articleshow/57728557.cms">forthcoming merger</a> with <a href="http://www.businessinsider.in/vodafoneindia-just-partnered-with-amazon-prime-video/articleshow/57717680.cms">Vodafone India</a> and <keyword id="2099963" type="UNKNOWN" weightage="100" keywordseo="Vodafone-Mobile-Services">Vodafone Mobile Services</keyword> (VMSL), its stocks dipped by 15%. 
 The deal has put Idea's implied enterprise value at $10.8 billion, as against the $12.40 billion valuation for <keyword id="6354923" type="COMPANY" weightage="100" keywordseo="Vodafone-India">Vodafone India</keyword>. 
 
After the stock fell 14.73%, it stood at Rs 92 on BSE. Earlier, it had risen 14.68% in the early trade and hit a high of Rs 123.75. 
 
Also read: <a href="http://www.businessinsider.in/airtel-vodafone-and-idea-are-facing-the-heat-from-jio-as-they-may-lose-upper-end-customers/articleshow/57287150.cms">Airtel, Vodafone and Idea are facing the heat from Jio as they may lose upper-end customers</a> 
 
In its filing to BSE, <a href="http://www.businessinsider.in/with-idea-making-incoming-calls-free-national-roaming-willsoon-be-a-matter-of-past/articleshow/57606367.cms">Idea</a> had said that after the deal, its promoters will hold a 26% stake in the resultant entity, while <keyword id="15492" type="CITY" weightage="100" keywordseo="Vodafone">Vodafone</keyword> will hold 45.10% after its promoters would transfer a 4.9% stake to Idea promoters for Rs 3,874 crore in cash. Rest of the stock would be for the public. 
 
Also read: <a href="http://www.businessinsider.in/reliance-jio-will-be-unfazed-by-vodafone-idea-merger-heres-why/articleshow/57509811.cms">Reliance Jio will be unfazed by Vodafone-Idea merger. Here’s why</a> 
 
"We expect the combine entity will have about 40 per cent revenue share. In the process of integration and combining the two big operations, they might lose some revenue market share to Jio or to other incumbents. We estimate about $11-12 billion revenue and Ebitda margins of 28-30 per cent, once these firms combine their operations." Nitin Soni of Fitch Ratings told ET. 
 
Idea also announced that it would issue equity shares to Vodafone India after the scheme of amalgamation with VMSL. This would be equal to 47% of the post-issue paid-up capital of the company on a fully-diluted basis. 
 
The company also said that after the merger, shares issued to Vodafone India in pursuant of the merger of VMSL with the company would stand cancelled. 
 
(Image source: Forbes)

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The magic number that Vodafone Idea, Airtel and Jio are chasing is 50

Katya Naidu

Vodafone Idea stock tanks 16% to ₹3 after rating downgrade

PTI

Vodafone Idea is readying a $3.5 billion warchest to take on Jio-- and markets are cheering

Sriram Iyer

Top three telecom companies’ debt is at ₹3.9 lakh crore — that’s half of India’s fiscal deficit

Katya Naidu

Idea-Vodafone merger dips Idea stocks by 15%

BI India Bureau

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