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Bharti Airtel Hopes For A 50% Increase In 4G Spends By Consumers

Bharti Airtel, India’s second largest telecom company by revenue, said it sees a “massive opportunity” for growth in India, its key market, due to the exit of all but four players.

“A 3+1 player industry is a great outcome,” it said at the CLSA Investors Forum at Hong Kong.

WIRELESS STRATEGY

On 4G, the company said it is looking for a 50% upside to average spends by consumers.

Airtel has seen its average revenue per customer  or the average amount spent by one customer  drop from around Rs 190 per month to Rs 105 per month after the entry of Reliance Jio in the telecom space, but is hoping for a ‘repair’ of the situation.

The company said the market is currently divided into two segments  the 4G market and the non-4G market.

The non-4G market  comprising mostly of 2G voice users generate just around Rs 65 per month on average, the company said, while the 4G users generate twice as much, Rs 130 per month.

In terms of size, non-4G users comprise about 650 mln (65%) and 4G users comprise about 350 mln (35%). According to Airtel, the average consumption of data by a 4G user in India is 9 GB per month, compared to just 0.7 GB for the other category.

Similarly, the 4G revenue is growing at 12% every year, while the non-4G market is declining by 6%, it added.

In the current financial year, data users will overtake the number of voice-only for the first time ever in India, powered by an explosion of 4G devices.

While only around 7% of subscribers had a 4G phone two years ago, the figure has reached closed to 28% as of June this year.

Even as both consumption and uptake increase, Airtel is hoping that consumers will spend more per month on their 4G connections. From the current 130 rupees, it hopes to see the monthly spend rise to Rs 195.

While the industry is united in articulating the need for customers to spend more, there are currently two schools of thought about how that can be achieved.

The first school of thought says it can be achieved by getting them to use more and more data, which will push up their overall spending. So, instead of 1GB/day, customers should be enticed to move up to 2GB/day plans.

The second school of thought sees the increase in expenditure coming from an increase in prices rather than an increase in per-capita consumption.

For example, at present, 4G users can get about 1 GB of data per day and unlimited calls for about Rs 125-150 per month. Raising this tariff to a range of Rs 220-240 per month could lift the monthly spending to about Rs 190.

Airtel said higher spends could be achieved through ‘price repair’.

BROADBAND AND PAY TV

Besides 4G, Bharti Airtel said that it sees massive opportunity on the broadband and pay TV side as well.

Out of around 18 mln broadband homes in India, it pointed out, its share is modest at just 2 mln.

Similarly, out of 150 mln pay TV connections, the company has a share of only 14 mln.

The comments come in the context of Reliance Jio launching a massive roll-out of its broadband-cum-IPTV service, Jio GigaFiber.

Airtel said it will continue to contribute to the open ecosystem, relying on hardware partners such as Samsung and Xiaomi to provide devices, software partners such as Netflix and Amazon to provide content, and a variety of apps such as PayTM, Facebook and others to add other functionality. – Ultra News

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