Jio’s growth forced mergers, bankruptcy filings, says Fitch; here’s how Airtel may perform in 2019

By: |
August 5, 2019 5:24 PM

Reliance Jio's aggressive posturing has begun to show the divergent impact on entrenched telcos, with Vodafone Idea getting impacted sharply and Bharti Airtel holding on, a report said on Monday.

Mukesh Ambani, Reliance Jio, Jio subscribers, ARPU, Reliance Industries Limited, latest news on reliance jioFor Vodafone Idea, it was the market share loss to Jio which proved to be the undoing and led to a weak numbers for the June quarter, Airtel could hold on, global rating agency Fitch said in a note.

Reliance Jio’s aggressive posturing has begun to show the divergent impact on entrenched telcos, with Vodafone Idea getting impacted sharply and Bharti Airtel holding on, a report said on Monday. The deep-pocketed Jio’s entry has so far impacted all the telcos, forcing mergers and also bankruptcy filings. For Vodafone Idea, it was the market share loss to Jio which proved to be the undoing and led to a weak numbers for the June quarter, Airtel could hold on, global rating agency Fitch said in a note.

The agency also estimated that Airtel, which has now begun the third biggest telco after Reliance Jio and Vodafone Idea, to show operating profit growth in India this year on improvements in average revenue per user (ARPU), easing competition and cost savings.

It said Airtel’s operating profit grew 7 per cent during the June quarter as compared to the three months ending March on an ARPU growth and shift of more consumers to the 4G network. Vodafone Idea’s revenue slipped 4 per cent and operating profit was down 22 per cent during the same period, as it lost 14 million subscribers, it said. In comparison, Jio posted revenue growth of 44 per cent and 37 per cent growth in operating profit, it said.

Internet experience is the key aspect which is influencing customers and not tariff where no differentials exist, it said, adding that Bharti and Vodafone-Idea are improving their 4G coverage. Going forward, Telcos are likely to monetise their tower and fibre assets to deleverage and create financial flexibility, it said in the note that comes days after Jio announced a Rs 25,000 crore deal to sell tower assets to Brookfield.

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