Latest Airtel Results Debunk Telcos Arguments on Data Revenues (Once Again!)

One of the primary arguments posed by telcos in the current public debate on network neutrality is that they are making massive revenue losses on account of their primary business (voice telephony) being eaten into by over the top services provided by applications such as Skype. Of course, telcos fail to mention the huge increase in revenues they are seeing due to the increased usage of data services by users (including by using services such as Skype etc).

Despite the numerous statements to the effect that their revenues from data are insufficient to make ends meet (see for instance, the comments made by ISPs to TRAI in its consultation on regulation of OTTs) it is becoming increasingly clear that this is indeed nothing but a blatant falsehood.

The latest Airtel Quarterly Results, announced on August 4, once again illustrate just how profitable data – and by extension the business of telcos - actually is. “Airtel posted about 40% jump in consolidated net profit to Rs 1,554.3 crore for the first quarter ended June 30, 2015-16, on account of sale of mobile tower assets and boom in data usage.”1

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As per information released by the company, mobile data or Internet revenue of the company grew by 67.3%, year-on-year (y-o-y) basis, to Rs 2,609 crore. The mobile data customer base of the company increased by 25.8% to 4.95 crore at the end of the quarter, from 3.93 crore in the year-ago period. Airtel’s MD and CEO in fact noted that “Mobile minutes and data traffic have grown by 7.4% and 83.4% respectively”.

These figures not only show the massive increase in data usage and therefore revenues but also that voice minutes are not actually decreasing at all! This entire argument for regulating OTTs is therefore spurious.

Airtel’s performance is also not completely unforeseen or indeed unmatched by its peers. Companies such as Vodafone and Idea too are posting huge revenue numbers – backed largely by increases in data usage.2

If you are to look at any projections of incomes of telcos – both internal projections as well as done by various investment groups etc. it is clear that while the revenue mix for telcos will indeed change – i.e. a greater proportion of revenues will come from data, the total revenues itself will continue to increase at a pretty good rate due to the massive increase in data revenues.

In the circumstances, there really is no excuse for telcos to not invest in infrastructure development, or indeed to put in place inequitable and unjust commercial practices that violate principles of net neutrality.

Disclaimer: The views expressed here are the author's personal views, and do not necessarily represent the views of Newsclick 

1. http://timesofindia.indiatimes.com/business/india-business/Bharti-Airtel-Q1-net-up-40-on-data-boom/articleshow/48353630.cms
2. Vodafone has declared record profits for a couple of years now - backed by growth in its subscriber base, higher call rates and increased data usage. Idea’s profit after tax increased by over 100% from 2013 to 2014. See http://www.business-standard.com/article/companies/vodafone-posts-1st-fy-profit-in-india-114052001237_1.html and http://economictimes.indiatimes.com/idea-cellular-ltd/profitandlose/companyid-3154.cms