Bharti Airtel’s low-cost strategy, which enabled it to amass a large subscriber base in 20 markets, is unsustainable and demands new focus, BMI Research said today.
Airtel provides mobile services across its South Asian and African footprint, and fixed line, DTH digital TV, business and tower infrastructure services in India.
BMI Research said Airtel targets first-time data users and traditionally adopts a low-cost strategy, betting on developing markets’ strong growth potential to offset consumption constraints and other operational and political risks.
“Airtel’s low-cost strategy and operational scale enabled the operator to amass a large subscriber base in its 20 developing telecom markets. However, this strategy has proven to be unsustainable and the operator is looking for ways to remedy unprofitable operations in Asia and Africa,” BMI Research said in a report.
BMI said Airtel relies heavily on the domestic Indian market to compensate for losses in all other regions.
“The company’s 87 per cent y-o-y in profit after tax to Rs 51.83 billion in FY15 was largely driven by Airtel’s leadership in India. To maintain this position, high levels of investment are demanded,” it said.