1. Reliance Jio impact bites, Bharti Airtel to cut rates further

Reliance Jio impact bites, Bharti Airtel to cut rates further

Data saw a 13% sequential growth in volume, a 10% quarter-on-quarter growth in realisation and 10.6% jump in usage on a sequential basis.

By: | New Delhi | Published: November 2, 2016 6:06 AM
Data saw a 13% sequential growth in volume, a 10% quarter-on-quarter growth in realisation and 10.6% jump in usage on a sequential basis. (PTI) Data saw a 13% sequential growth in volume, a 10% quarter-on-quarter growth in realisation and 10.6% jump in usage on a sequential basis. (PTI)

Bharti Airtel might drop tariffs further if needed to fight Reliance Jio Infocomm which has rolled out free services for a limited period. However, the country’s biggest mobile services provider will not stretch discounts to a point where voice calls are not charged for altogether, Gopal Vittal, CEO (India and South Asia), asserted on Tuesday. Vittal conceded RJio’s aggressive launch could lead to further softening of prices but was confident this would be compensated for with a commensurate rise in volumes. Ruling out free voice calls a la Rio, the CEO said in reality no calls were free.

“What Jio is doing is charging for data packages rather than for voice. We too offer such packages but we cannot make voice free across the board. We have a large subscriber base and 75% of our subscribers do not use data and nor do they have smart phones,” the CEO pointed out. He added, “How do I charge these customers?”

Airtel’s approach, the CEO observed, was “not this or that” but “this and that”, meaning that it would combine voice and data to address the needs of all its subscribers. “Our challenge is how to bundle it. Bundling and de-coupling defines the scale and complexity of our business and since we know how to do it, we win and will win once again,” Vittal said, referring to the fresh challenge from Jio.

While softening in prices are a reality, Vittal also enumerated the advantages with the coming of Jio, which he termed as a “well capitalised” and a “long-term” player. “Data consolidation will happen, there won’t be fragmentation in spectrum as smaller players will get squeezed out and the market will return to 3-4 players,” he said.

Vittal accepted that Bharti’s mobile business has experienced a slowdown in growth during the July-September quarter due to free services being offered by a new operator. The company’s voice revenue, which comprises 70% of the total mobile revenues, saw a 3.6% sequential decline while data revenue, which comprises 25% of the total mobile revenues, grew at a meagre 1.4% quarter-on-quarter during the July-September period. Voice realisation was down 3.2% sequentially to 32.4 paise per minute, while average revenue per user (Arpu) fell to an all-time-low of Rs 132.

Data saw a 13% sequential growth in volume, a 10% quarter-on-quarter growth in realisation and 10.6% jump in usage on a sequential basis.

Since the commercial launch of Jio took place on September 5, analysts maintain that the full impact of Jio’s launch on Bharti’s metrics will be fully felt only the third quarter of the fiscal. However, while acknowledging that pricing will further soften, Vittal declined to give any estimate of the impact. Instead, he gave his analysis of how Airtel has held on to its subscribers. Its monthly churn at 3.7% is the lowest in the industry. The churn among the high value customers (monthly bill of Rs 1,000 and above) is as low as 1%. “We continue to get 50% of the incremental industry revenue. By saving 1% churn you save a revenue of around Rs 7,000 crore annually,” he said.

Dwelling on the points of interconnect controversy where the Telecom Regulatory Authority of India has recommended a Rs 1,050 crore penalty on the company for inconveniencing the subscribers of Jio, Vittal put up a spirited defence. “We have done everything we could have humanly done. The amount of augmentation runs into thousands of points of interconnect in five weeks. We have offered a staggering pace of augmentation to the new entrant, and the quantity of augmentation we have done is 2.5 times that of any other player with equivalent set of customers,” he said. Vittal blamed Jio for the congestion stating that PoIs are a two-way connect and Bharti found that in may circles Jio was not ready with its transmission links. “The department of telecommunications has not got back to us on the issue but when it does we are confident of putting across our view and I am sure the matter will get resolved,” he said.

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