Slowly and surely, this is how Bharti Airtel scripted its return to a highly competitive telecommunications market that was disrupted by the entry of Reliance Jio in 2016.
Airtel’s consolidated net profit for the fiscal fourth quarter ending March increased nearly 2.5 times on the back of tariff hikes, numerous user additions and one-time gains. The price increases also led to a 9.5% increase (on a quarterly basis) in average revenue per user (ARPU), a key indicator of profitability. Airtel’s ARPU rose to Rs 178 from Rs 163 in the December quarter. Market leader Reliance Jio and loss-making Vodafone Idea had reported ARPUs of Rs167.60 and Rs124, respectively.
Airtel’s ‘quality vs. quantity’ strategy and other initiatives, including digital ones, have begun to yield results, giving stiff competition to Jio, which once usurped Airtel from its position as the biggest telecommunications player. . There are two formidable players in the market, while the other two – Vodafone Idea and the state-run telecommunications PSU BSNL are lagging behind.
While SIM card consolidation led to lower subscriber numbers for the industry, Airtel reported a quarter-over-quarter subscriber addition of 3.1 million.
Analysts attribute this to consumer benchmark for Airtel’s offering over the competition, which will continue to boost its 4G market share and, in turn, its revenue market share.
Airtel’s wireless business in India is expected to deliver 35% and 22% growth in operating profit and revenue, respectively, compounded annually in FY22-24, driven by share gains from sustained markets and annual rate increases. Airtel’s core non-mobile businesses, such as corporate and home broadband, which saw 13-46% year-on-year growth in the March quarter, are strongly supporting the company’s mobility business. telecommunications operator.
The second largest telecommunications player, Airtel, is also expected to impose another price hike during the 2022 calendar as it seeks to boost ARPU to Rs 200 with the market poised to “easily absorb” another hike. The long-term plan is to raise it to Rs 300. The telecom industry together increased prepaid tariffs by up to 25% last November/December to increase APRUs.
On the 5G front, the government is moving fast. The Department of Telecommunications (DoT) is expected to present a Cabinet memo soon paving the way for the 5G spectrum auction. This will make 5G a reality in 2022.
The Digital Communications Commission (DCC), the supreme decision-making body of the Department of Telecommunications, had supported the reserve price recommended by the Telecom Regulatory Authority of India (Trai) while it had already retained the frequency of the 28 GHz band for further studies. Cabinet approval is required for the DCC’s recommendations which largely included Trai’s views on the quantum and price of spectrum for commercial deployment of 5G services.
However, the telecommunications industry has expressed disappointment with the reserve price of 5G spectrum.
Airtel CEO Gopal Vittal said the industry had hoped for a much bigger cut which did not come. “The industry had hoped for a massive reduction in prices; although there has been a reduction, it has not been adequate and is in that sense disappointing… Airtel’s 5G auction strategy and approach will depend on the final reserve price finalized by the government.
Trai’s recommendations are a blow to telecom operators who have been pushing for 5G reserve prices to be lowered by 90%, from the 39% average drop in 2018 prices suggested by the regulator last month.
Vodafone Idea’s director of regulatory and corporate affairs, P Balaji, also called for making 5G spectrum more affordable. “5G has meant more capabilities being driven, more applications coming into play, and adjacent industries like smartphones, healthcare, fintech, edtech, etc. proliferate, but revenue streams have not increased, ARPU has not increased. This is the reality we see around the world after several years of 5G deployment,” Balaji said.
If this is obvious, it is all the more important that street furniture be made available quickly and at very low cost, in a shared manner for the four telcos in the country.
Finally, the DoT was working to bring India’s telecommunications regulatory structure up to par with global standards, according to Communications and Information Technology Minister Ashwini Vaishnaw. Globally, the telecommunications industry was consolidating and the structure of the telecommunications industry was undergoing a major change, Vaishaw said, capital intensity in the sector had increased while technology cycles were shrinking.