Why Bharti Airtel Won’t Mind Losing #2 Spot

Bharti Airtel Ltd. is expected to lose its No. 2 rank in the world’s second-largest telecom market. But billionaire Sunil Mittal won’t be complaining.That’s because it’s a fallout of the company’s focus to retain paying consumers. Bharti Airtel started charging a minimum amount from user for staying active on the network in the quarter ended December in an effort boost profitability. It dumped more than 4.8 crore non-paying users during the period—the biggest churn since listing.It’s likely to make Reliance Jio Infocomm Ltd. India’s No. 2 operator by subscribers. The nation’s newest wireless carrier, controlled by India’s richest man Mukesh Ambani, disrupted the telecom market first by offering free services and then through rock-bottom pricing. The resultant tariff war hurt profitability of rivals, forcing them to either shut down or merge. Vodafone India and Idea Cellular combined, relegating Bharti Airtel to the second place..Bharti Airtel’s 4G PushStill, despite losing subscribers, Bharti Airtel’s revenue from domestic mobile services business fell only 0.6 percent as the company added more 4G users, leading to higher revenue generation. “4G customers come at a high average revenue per user and increasing this side of customer base is essential as the same will be revenue accretive for the telecom operators,” Rajiv Sharma, co-head of Research at SBICAP Securities said..Bharti Airtel has more than doubled its 4G user base in the last one year. From 3.6 crore back in 2017, its user base has increased to more than 7 crore at the end of 2018.Average Revenue Per User StabilisesThe tariff war brought upon with the entry of Reliance Jio on Sep. 5, 2016 has dented Bharti Airtel’s revenue by a third. Bharti Airtel’s Indian mobile service unit earned a revenue of more than Rs 15,000 crore in the first quarter of financial year 2017, which fell to a little more than Rs 10,000 crore in the last quarter.However, the rising share of 4G users, improvement in ARPU and no proposed tariff cut, this falling revenue trend in the mainstay Indian mobile services business could well reverse. Sanjesh Jain, a telecom research analyst with ICICI Securities, said the confidence of revenue growth on Bharti Airtel’s India mobile revenue from Q4 remains high only if there will be no cut in tariffs.The company has seen some stability in customer revenues number, said Nilanjan Roy, Bharti Airtel’s global chief financial officer, in an earnings call. Reported numbers have declined, but that is largely because of decline in non-customer revenues, he said, adding that underlying customer revenues are seeing early signs of bottoming out.Bharti Airtel’s ARPU rose in the December-ended quarter due to its new strategy and price hikes. The company increased tariffs of its low-price data pack by 20 percent to Rs 119 even as higher tariff plans with free Amazon and Netflix packs saw more traction.The pricing pressure may be relenting a bit. Reliance Jio has indicated that it does not feel a need to change its tariffs currently as the company has been seeing good subscriber traction.That said, the signs of recovery in revenues may not necessarily result in better earnings for Bharti Airtel in future. The pressure could well continue due to high capital expenditure, competition in mobile, broadband and enterprise businesses and phasing out of interconnect usage charges starting 2020.. Moody’s Downgrades Bharti Airtel’s Debt To Below Investment Grade

Why Bharti Airtel Won’t Mind Losing #2 Spot

Bharti Airtel dumped over 4.8 crore non-paying users in the December-ended quarter.

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