Airtel Voice RPM declined due to higher competitive intensity in a few circles. Recently, competition increased from leading players as opposed to smaller players in the past. In the medium-to-long term, voice RPM needs to rise though there may be quarterly fluctuations. The management was very clear in stating that their goal is to increase both revenue growth as well as market share and to this end current voice prices are unsustainably low. They also said that they were disappointed that voice prices have eroded substantially this quarter and that volume growth did not compensate for the price erosion.
Airtel Mobile Broadband
Overall Data penetration is low and pricing has been kept low to spur penetration and usage per subscriber. Once it reaches a certain level of volume, the company will relook at pricing. Data revenue growth due to positive elasticity is healthy and so is subscriber growth. 4G will result in higher ARPU and hence ARPU would be a better metric to track going forward. The response to 4G launch has been good. It has also worked positively for the brand. Swap between regular SIM and USIM has been made seamless. Once the subscriber moves to USIM, he can easily move to 4G. Airtel along with incumbents may have to move to Uniform Branding of Mobile Broadband Services as already detailed here.
900MHz can be used for LTE in future. Airtel’s Foreign Partner – SingTel has already deployed a LTE network in this band in Singapore. Hence, over time, Airtel would have sub-1GHz LTE spectrum. 900Mhz Spectrum 3G is currently up and running in six circles including Mumbai, AP, and Karnataka. The indoor coverage is significantly better.
Airtel Management on Spectrum Auction 2016
Auctioning 2100MHz is the right move as it will decongest the network and address the call drop issue to some extent. It is also positive to note that TRAI has proposed the second 2100 to be contiguous with the first block. Auctioning 2300 and 2500 is also positive. Airtel has gaps in 5 circles on 4G [UP(e) and UP (w), Gujarat, Assam and Bihar] which it would look to fill. Airtel cannot afford to purchase 700 at the proposed reserve price. Moreover, the 700 ecosystem is nascent at present according to Airtel Management [We disagree].
Airtel fibre network is competitive especially in key cities. 4G needs higher % of sites to be fibred than 3G. It need not be 100%. Bharti will not be caught short. Airtel looks for opportunities to buy, co-build and lease fibre to keep costs lower. Microwave technology has also improved. 1Gbps is possible with microwave and Airtel also runs much microwave on 250-300Mbps. Enterprise and home broadband can also leverage the fibre backhaul.
Airtel is working to reduce the cost of access. 5-6 cities account for a large portion of the revenue even though Bharti is present in 90 cities. Better go-to-market strategies and lower churn due to customer experience have resulted in improved performance. Enterprise has seen better automation at the back-end and this has resulted in lower delivery cycle time. All but one product has been fixed. Hence order book, revenue, and profitability have improved.
We have no comments on Airtel’s Africa / Bangladesh Business as it is beyond our comprehension and we’ll leave the coverage to Sunil Mittal himself 🙂