After weathering the choppy seas left in the wake of Jio’s disruptive entry, rival Bharti Airtel Ltd, which till a year ago wore the crown as India’s number one telco, has finally managed to steer into stable waters, with its customer retention and engagement strategy driving up data usage and monthly revenue.
This, in turn, raises hopes of a turnaround in a sector which has seen margins squeezed and revenues eroded by Jio’s launch of dirt cheap data tariffs in September 2016. That disruption forced operators to either shut down or get acquired or merge businesses, leaving just two other private players in the battlefield: Airtel and the merged entity of Vodafone India and Idea Cellular.
In just the last six months, Airtel has introduced a slew of measures to take on Jio.
It started with rolling out monthly minimum recharge plans starting at Rs.35 to weed out inactive users, which improved its average revenue per user (ARPU).
For consumer engagement on the network, it launched Wynk Tube, which is an extension of its music streaming service Wynk Music, targeted at small-town vernacular users that will allow streaming both audio and video within the same interface. It has also introduced an e-book mobile application, Airtel Books, as a subscription service for niche users. To retain its prepaid customers, who make up over 90% of its total user base, it has introduced a loyalty programme where you get benefits based on the size of your tariff plan.
“Bharti is showing courage. Look at how the minimum recharge plans worked and improved its average revenue per user. It seems like it does not fear that Jio will cut prices. The better news is wherever Airtel is taking the lead in raising tariffs, Vodafone Idea is also following,” a Mumbai-based analyst said requesting anonymity.
Airtel’s ARPU for the March quarter was Rs.123, an 18.6% increase from Rs.104 in the December quarter. Jio’s ARPU for the March quarter is just Rs.3 higher than Airtel’s at Rs.126.2. Vodafone Idea lags behind these two at Rs.104.
Take another metric. Airtel’s data consumption per user was 11 GB per month in the March quarter, for the first time beating Jio, which saw usage of 10.9 GB per month in the same period.
Its strategy to get users to consume more data on its network is expected to result in a further uptick in average revenue per user and customer engagement, two metrics which are already showing signs of improvement.
In fact, during the January-March quarter, Vodafone Idea lost 53.2 million users while Jio added 26.6 million. Airtel lost just 1.5 million users and managed to improve revenue.
Airtel’s India wireless business posted a revenue of Rs.10,632.3 crore in the March quarter, up from Rs.10,353.2 crore in the year-ago period.
Interestingly, its gross revenue per employee per month rose 9.8% year-on-year toRs.31 lakh while personnel cost per employee per month came down 5.9% year-on-year to Rs. 109,196.
However, these green shoots have emerged after over two years of a brutal tariff war and the industry believes tariffs must rise for the sector to go back to its glory days.
“If you look over a long period of time, prices are not coming down anymore. So competitive intensity is stable because we’re not seeing any further fall in pricing,” Bharti Airtel CEO Gopal Vittal said in a post-earnings call with analysts on Friday. “But it is still a brutal marketplace in terms of pricing structure… and industry repair has to happen”.―Livemint