On the call, the CEO of the telecom company pointed to Airtel’s 5G testing, defended daily data limits, and hoped the government would provide some relief to the industry.
Key points to remember
- Airtel India revenue was Rs 18,828 crore in the first quarter of fiscal 2022, up 19.2% year-on-year excluding the impact of user fees of interconnection.
- On the same basis, India’s mobile income grew 21.9% year-on-year and stood at Rs 14,305 crore.
- Monthly data usage per user is up 13.7% to 18.5 GB.
- In the absence of price increases for prepaid users, the average revenue per user has only increased from Rs 138 to Rs 146 year-on-year.
- Consolidated net profit stood at Rs 266 crore, compared to a loss of Rs 430 crore in the same quarter last year.
Why is this important? Even as Airtel continues to post increasingly promising earnings, the risk of the telecommunications market becoming a duopoly is high. We are talking about financial stress at Vodafone Idea; The Economic Times, for example, reported executives trying to appease employees and investors on these concerns, but there is still no information on the capital injection. Even Airtel is worried (see below) about the state of the telecoms market with only two private players; This is despite the fact that Airtel’s numbers appear to be recovering fairly well since the disruptive entry of Reliance Jio.
Take-out winnings calls
Here are some highlights from Bharti Airtel (India) and South Asian CEO Gopal Vittal during the quarterly earnings call.
- Postpaid family plans create barriers to departure: Airtel focuses on high-value households and keeps them tied to the business through postpaid plans that aren’t easy to leave, Vittal said. “The post-paid family plan has a powerful network effect and creates barriers to exit. Almost 61% of our postpaid customers now have a family plan with a negligible churn rate, ”said Vittal. The churn rate is the rate at which customers leave a service.
- 30 of the 50 high value homes covered: “There are potentially 50 million high value homes in India. They include executives, independent professionals, business people and others, ”Vittal said. “The most exciting thing for us is that nearly 30 million of the 50 million high-value households are already on our network, whether with post-paid, DTH or broadband connections. This opportunity is therefore really ours to exploit. “
- 5G trials in several cities: While the 5G spectrum has yet to be sold, Airtel has started testing the technology. “We have built a network that is fully 5G ready. This is a capability that we have already demonstrated by performing the first 5G demonstration in India on a live network and are now conducting trials in several cities. We have made substantial investments in our transport layer over the past five years to be ready to deploy 5G when needed, ”said Vittal.
- Need 3 players on the market: “I think as a country we need three players. I mean, it’s a pretty big country with 1.3 billion people that can easily accommodate three players in this market, ”Vittal said. “So there is clearly a situation of serious financial stress in the industry. And, you know, we saw one of the actors telling the government that he might not be able to pay the [AGR] the dues will be coming in March 2022. We hope that, you know, the government will do something to take the pressure off the industry. But more importantly, I think if the ARPU can increase, industry repair can certainly happen. “
- 2G, the price increases companies tested first: Responding to a question about why Airtel waited so long to increase corporate 2G and postpaid plans, Vittal replied, “We had tested this [change] for a while in Andhra Pradesh and UP West. The reason we have chosen these two markets is that one is a strong market and the second is a relatively weak market. And once we found the satisfactory results, we went ahead and did it. [nationally]”Vittal said. Regarding the unilateral price increase for prepaid retail users, Vittal said this could result in” some customers moving maybe more price elastic. And I think, therefore, that we have to be a little more careful about it. “
- Device ecosystem: Vittal said Airtel will try to compete in the handset market, but said the company does not want to have phones in its inventory. “We are working with both OEMs, with Google, as well as with software developers to see how we play this game in the smartest way without taking inventory positions, without building our own device while playing. with the ecosystem as a whole. But being competitive, I’m not able to share a lot more textures and details about it because some of that is still being worked out and it’s still not clear, ”Vittal explained.
- In defense of daily plans: “I think this is the right way to go because the current model of a daily GB quota where people still do not use their full quota and therefore consumption increases without necessarily proportional increase in ARPU,” said Vittal said of the daily data. limits. Essentially, daily data limits allow carriers to sell more data than what customers end up using because a fixed portion of the allocation expires each day instead of being rolled over.
Quotes are edited slightly for clarity.
Results | Press release | Call for winnings | Infrared pack
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