India’s Leading Wireless Service Provider which is known for the Minutes Factory Model came under pressure for the quarter ending Dec-2012. Call volumes have shrunk 1% in six months from 221,560 bn minutes to 219,152 bn minutes – we can infer that this is due to tariff hikes. Mobile ARPU at Rs 187 and MOU at 419 down 1%. Thsi can be attributed to the fact that either Airtel’s subscribers made fewer calls, or they used SIMs of competitors to make calls. This clearly highlights that although all operators announced tariff hikes, some, like Idea and Uninor, focussed more on capturing traffic growth and subscriber net additions and not tariff hikes.
Revenue Strategy: Bharti Airtel carefully devised a strategy to put pressure on Vodafone and Idea in circles where Airtel is strong so as to force them to become more rational in Bharti’s stronger markets. Management believes that Revenue will pick up with a lag and expressed dis-pleasure at the lack of patience shown by its closest competitors and they rushing to offer freebies due to concern that tariff hikes would permanently impact volumes. With this Bharti Airtel has signalled that while it will stick to tariff hikes, it will be competitive in the subscriber acquisition segment and the special tariff voucher segment
Finally, 3G business and regulatory levies will raise voice realizations for the overall sector. We believe that license cancellations should bring down tariff irrationality. IT will be interesting to see if Vodafone, Idea, Reliance Communications and Tata DoCoMo will be better off maintaining discipline in the market than getting into RMS War.
Key Points and Highlights from the Con Call
It was an yawning event with CFO, Mr. Dhillon’s Poor Presentation – No Data Insight just read out what was published, such a waste of time.
- Broadband Subscriber Base at 1.4 Mn – Approximately 10% of India’s Broadband Subscribers. [Makes no sense as TRAI Data Collection methods are Obsolete] Airtel Broadband has ARPU of Rs 916
- Bharti now has 8m 3G subscribers and 24m mobile internet subscribers
- Capex guidance maintained at US$3.2bn, with ~US$2.4bn spent in 9MFY12
- Non?voice revenue (VAS) declined to 14.3% of mobile revenue from 14.5% inQ2FY12 as Bharti adopted tighter norms for VAS services by TRAI.
- No to Bharti Airtel Branded Android / SmartPhone Handsets for the moment
I have skipped African coverage of Airtel operations as its a bit too much for me and is beyond my interest.