Under the new plan, prepaid mobile subscribers will be charged 1 paisa per second for all local and STD calls to Airtel numbers and 1.20 paise per second for local and STD calls to other networks.
In an exclusive interview with FE, Airtel president, mobile services, Atul Bindal, revealed that a per-second billing plan for post-paid customers is on the way. Bindal denied that the company was joining the ongoing price war, saying if other players matched its offering, it would only serve to bring the affordability barrier down a notch.
It was an across-the-board, per-second billing plan launched by the countrys sixth-largest operator, Tata Teleservices, in June followed by a flat 50 paise charge for all calls to all networks by second-largest Reliance Communications that kicked off the current price war. In August and September, Tata Tele added 7.4 million new subscribersthe highest in the industry by any operatorclearly overtaking Airtels 5.3 million additions for the two months.
Earlier in the day while announcing the companys Q2 results, Bharti group CEO Akhil Gupta and Bharti Airtel CEO Manoj Kohli had said that while the company would match the best tariffs, it would not be in the race for the lowest denominator. Asked if the new plan announced in the evening did not contradict the mornings statement, Bindal said We are not dropping tariff on a rack-rate basis from tomorrow.
It has been a worrying few months for Bharti. On a sequential basis, the company for the first time posted a 7.8% decline in net profit at Rs 2,321 crore, compared with Rs 2,517 crore in the first quarter. On a year-on-year basis, net profit rose 13%. Revenues during the period rose 9% at Rs 9,846 crore on a yearly basis, but fell 0.97% against Rs 9,941 crore in Q1.
Gupta acknowledged the blip, saying, Irrational pricing could lead to temporary pressure on the companys topline and bottomline, but (the company would) eventually emerge stronger. Gupta said a strong balance sheet, extremely low levels of debt at less than Rs 1,000 and integrated operations were the companys strong points.
Bhartis shares closed down 6.38% on the BSE at Rs 292.15. After opening firm, the price had slid 6.89% to Rs 290.55 in intra-day trading.
The countrys telecom sector has for long been based on a low-cost, high-volume model wherein average revenue per user (Arpu)--generally the barometer to measure the health of a mobile firmdid not matter. However, the problem being faced by operators for a year now is that average talk-times are also declining.
With more than 60% of net additions coming from rural areas, the outlook on talk-time is bleak and thats the reason Bharti is increasingly focusing on its non-mobile businesses like DTH, enterprise and broadband. Gupta said during the current quarter, 35% of Ebitda came from the non-mobile businesses.
The numbers tell the story in Bhartis case. It registered the sharpest ever decline in Arpu at Rs 252, down 24%, from the corresponding period last year. The quarter-on-quarter decline was 9%. Minutes of usage (average talk-time) were down 15% on a yearly basis and 6% sequentially. Customer addition was down 4% on a sequential basis, while it registered a mere 1% growth y-on-y.
The companys slowing growth comes barely weeks after Bharti failed to arrive at a cash-cum-stock swap agreement with South Africas MTN, which would have catapulted it into the global big league. When asked whether the company is looking at other potential partners such as Zain in the Middle East, Gupta said nothing is on the horizon at the moment.