Bharti Airtel likely to continue winning market shares

Industry AGR (incl. NLD) grew 12.8% YoY / 1.9% QoQ to Rs466bn on 4G and postpaid sub adds and selective tariff hike by Bharti Airtel (Bharti) and VIL. Bharti has gained AGR (incl. NLD) market share of 100bps QoQ (370bps YoY) despite one-off gain in base, and it is the third quarter in row where Bharti has added more incremental AGR compared to RJio. Bharti is benefitting from strong market share gain in metro and A’ circles, which are growing fast. On the other hand, RJio has gained market share in B’ and C’ circles, which are smaller and have grown relatively slow. Bharti is likely to outperform in H2FY22 too as it has shown ability to win in SIM consolidation and translate tariff hikes to higher AGR.

Industry AGR (incl. NLD) rose 12.8% YoY / 1.9% QoQ to Rs466bn. BSNL revenue dipped 22% QoQ while the top-3 operators’ AGR (incl. NLD) rose 15.5% YoY / 3.7% QoQ benefiting from reversal of covid impact in Q1FY22 and an additional day in Q2FY22. Further, Bharti / VIL have taken selective tariff hikes, which have added to growth. We expect growth to accelerate in next two quarters from the 20-25% tariff hike in the prepaid category. Industry GR has grown at a slower rate of 1.8% YoY (3.1% QoQ) to Rs508bn on nil IUC revenue.

Bharti’s AGR (incl. NLD) up 25.8% YoY / 4.9% QoQ to Rs167bn. Bharti’s AGR (incl. NLD) market share rose to 35.9%, up 100bps QoQ / 370bps YoY. It is higher partly due to lower AGR for BSNL; nonetheless, Bharti is seeing smart increase in its AGR market share. This is the third quarter in a row where Bharti has shown higher incremental (YoY) revenue – of Rs34bn vs RJio’s 26bn. This implies Bharti is winning higher AGR market share. Its performance is driven by strong show in Delhi (market share up 690bps QoQ), Mumbai (850bps, and for first time claimed market leadership), AP (750bps) and Maharashtra (140bps). However, Bharti continues to show weakness in UP (east), UP (west), WB and Bihar. Company benefitted from market share win in fast-growing circles while it lost in the slow-growing ones.

VIL’s AGR (incl. NLD) market share stable at 18.6%. VIL’s AGR (incl. NLD) dipped 1.6% YoY / rose 1.8% QoQ to Rs87bn. It has shown good recovery in metro and A’ circles except for AP. However, it continues to struggle in crucial B’ circles where RJio is gaining market share and industry growth remains relatively low. VIL’s market share will hereon be determined by its ability to translate tariff hike into AGR.

RJio’s AGR (incl. NLD) rose 16.2% YoY / 3.6% QoQ to Rs187bn. RJio’s AGR (incl. NLD) market share was at 40.2%, up 60bps QoQ / 120bps YoY. RJio’s underperformance vs Bharti is due to market share loss in Delhi (down 890bps QoQ), Mumbai (740bps) and AP (450bps). However, it continues to gain market share in B’ and C’ circles, but these are relatively smaller circles and had lower revenue growth. As mentioned in the foregoing, RJio has been adding lower incremental revenue compared to Bharti in past three quarters; Bharti’s revenue in the preceding two quarters included dividend income while Q2FY22 was a credible show. Key to watch: RJio’s announcement of tariff hike and its translation to AGR. In the previous tariff hike, RJio was hit due to the resultant SIM consolidation.
CT Bureau