Despite the extreme disruption caused by the COVID-19, Bharti Airtel reported a decent set of numbers for the Apr-Jun period, though the pandemic clearly slowed down the growth of Airtel’s 4G service and exerted pressure on realizations.
PANDEMIC FREEZE
While the company has been reporting strong increases in the number of 4G users in recent months, the pandemic seems to have played spoilsport this time.
Bharti Airtel’s revenue from its India mobile services business fell by 0.6% during the three months ended June (Rs 12,877 cr) compared to the previous three months (Rs 12,953 cr).
This was primarily because of a loss of customers, rather than a curtailment of usage by existing customers.
Total number of wireless customers fell by 38 lakh (3.8 million or 1.3%) between March 2020 and June 2020 — one of the steepest declines seen in recent quarters.
In the preceding period (January-March), the company had managed to growth its wireless customer base by 6.3 lakh and in the quarter before it, the number had increased by 36 lakh.
Given that the revenue fell by less (0.6%) compared to the number of subscribers (1.3%), there was an increase in the per-head spending by customers.
As a result, average revenue generated per user (ARPU) increased to Rs 157 per month from Rs 154 in the Jan-Mar period and Rs 135 in the Oct-Dec period. Bharti Airtel is already well ahead of its competitors as far as this metric is concerned.
PRICING PRESSURE
In the latest quarter, company saw a 12% increase in the data consumed on the network compared to the previous three months, while there was no change in the amount of voice minutes consumed.
Assuming that about half of Bharti Airtel’s mobile revenue is contributed by data, this should have translated to a 6% increase in the total mobile services revenue generated by the company in India during Apr-Jun.
However, instead, it declined by 0.6%, indicating that the increased consumption took place without consumers moving to more expensive packs — either because Bharti Airtel started giving more data per pack, or more likely, because consumers started using their data allocations more fully.
4G CUSTOMERS
The company’s 4G business — its biggest driver of growth — too slowed down in keeping with the overall trend.
The operator had been adding a large number of new 4G customers to its network in recent quarters.
Bharti Airtel added 20.6 million new 4G customers in the Oct-Dec period, and 12.5 million new users in Jan-Mar.
However, in the latest period (Apr-Jun), the number was less than 2 million.
Nevertheless, 53.3% of Airtel’s wireless consumer base of 280 million is now on 4G services.
A COVID-19-induced slowdown could be seen in network expansion too. Bharti Airtel was not able to add new 4G base stations at the same pace it has been in recent quarters.
The company, which had added 30,024 new 4G base stations in the Jan-Mar period, was able to add only 3,074 such installations in the Apr-Jun period.
The total number of 4G+3G base stations now stands at 5.07 lakh.
While Bharti Airtel seems to have escaped the pandemic impact with relatively minor bruises, it remains to be seen how the other two telecom operators — Vodafone Idea and Reliance Jio — fare, when they report their Apr-Jun numbers in coming days.