In the first quarter of FY22, Bharti Airtel, India’s second-largest telecom operator, recorded a revenue increase of 21% to Rs 26,853.6 crore. The telco’s net profit fell by 63% to Rs 283.5 crore. All of their important businesses, on the other hand, improved over the previous quarter.
Gopal Vittal, Airtel’s CEO for India and South Asia, addressed the investors that only the wireless revenue was hit by the Covid-led shutdown and despite the resulting financial stress on many of the company’s lower-income customers, the rest of the portfolio performed well. “This shows you the resilience and strength of our portfolio,” he said.
Airtel has been performing well for some quarters now as a result of its significant expenditures in networks, households, and enterprise sectors. It has not only increased its subscriber base, but also its APRU (average revenue per user) over time.
Airtel’s 4G subscribers nearly doubled between June 2019 and June 2021, rising from 95 million to 184 million. Non-4G subscribers, on the other hand, fell sharply from 25 million in June 2019 to 9 million in June 2021.
Because 4G subscribers often pay more than non-4G subscribers, the APRU, which is the most crucial indicator for assessing a telco’s financial status, benefits directly. Airtel now has the highest ARPU in the business, at Rs 146. Reliance Jio’s ARPU is Rs 138.4 and Vodafone ideas is Rs 107 as of Q4FY21.
“Airtel has made large investments in its network over the last year, increasing its total sites by 12 percent and mobile BTS (base stations) by 30 percent.
It also enhanced its spectrum holdings in the recently-concluded auction. This helped drive strong 4G customer additions and its data throughput grew 49 percent year-on-year. Data usage per customer was at an all-time high of 19 GB (gigabits) versus 16.8 GB in 4QFY21,” analysts at BNP Paribas said in a recent report.
Recently, Airtel has increased the minimum prepaid pricing for its low-end consumers (from Rs 49 to Rs 79), as well as the minimum postpaid rates for business customers (from Rs 199 to Rs 299). The telco was initially hesitant to make the first step in boosting prices, but it eventually did so, which is likely to boost ARPU.
This is the industry’s first tariff increase since all three telcos voted to boost rates in December 2019. “We expect an uptick in ARPU in the coming quarters as a result of recent tariff changes, continued upgrade from 2G to 4G, and a potential tariff hike in the prepaid smartphone segment,” said a Goldman Sachs report.
“Airtel remains well-positioned to gain a disproportionate share of Vodafone Ideas’ (VIL) post-paid and 2G subscribers as VIL’s financial health is deteriorating,” the BNP Paribas report said. Airtel and Reliance Jio have taken a significant revenue market share from Vodafone Idea thanks to subscriber growth.
Airtel’s revenue market share reached an all-time high of 35.6% at the end of June. In recent quarters, two emerging segments — households and businesses — have made substantial contributions to Airtel’s development. During the first quarter of FY22, the home broadband vertical added 2,85,000 new subscribers, the most ever. This segment’s reach was extended by 96 cities, bringing the total number of cities to 387.
In the meantime, the enterprises’ division posted another quarter of single-digit sales growth over the previous year. According to Frost & Sullivan, Airtel’s enterprise data market share has increased to 31.4% from 24.4% a year ago.
“Airtel has grown the geographical reach of its broadband business 3.3 times over last 12 months using its partnership model with LCOs (local cable operators) for accelerated expansion. This is in line with our expectations of accelerated growth in fixed broadband penetration in India led by Reliance Jio and Airtel,” According to a Credit Suisse research.
While the second wave of COVID-19 had an impact on Airtel’s overall subscriber additions, the significant rebound seen in June-July must continue if the growth momentum is to be maintained.
