Bharti Airtel bleeds in Q4 but Reliance Jio impact could already be abating. The competitive intensity unleashed by Reliance Jio Infocomm since September last year continues to roil the Indian telecom market. Market leader Bharti Airtel has reported a sharp 2. March quarter and again blamed RJio (without specifically naming the rival) for its piteous financial performance in this quarter. But some analysts are now saying the RJio scare could already have begun to abate. Remember, this was the second straight quarterly decline in profitability for Bharti and the near term does not look promising, with more bloodbath foretold. But in the long run, perhaps, things may not look so gloomy. Reuters. UBS analysts Navin Killa, Namrata Penta and Curtis Li said in a recent note to clients that though competition remains intense, incumbents see a plateauing of RJio impact for now. Of course, incumbents Bharti Airtel, Vodafone India and Idea remain wary of further competitive reactions as RJio starts charging for services, which could anyway slow down RJio's subscriber take- up. But the fact that some of these large telcos see RJio’s disruptive effect dissipating or lessening already is quite interesting. Bharti’s net profit of Rs 3. March was the smallest in four years, against Rs 5. Revenue fell over 1. Wholesale customers: call +44 1 email [email protected]. Today, put some class in your life. Consider selling everything you own to buy a pristine A70 Toyota Supra. Rs 2. 1,9. 35 crore from a year earlier as data and voice rates fell. Earnings before interest, tax, depreciation and amortization—an indicator of operating profitability—declined 1. Rs. 7,9. 92. 8 crore from Rs 9,1. The average monthly revenue per user (ARPU) fell to Rs 1. March quarter from Rs 1. Average data revenue per user also declined to Rs 1. A website for all your movie, television and entertainment news. We are also the premier website for movie screening in Northern California. Latest breaking news, including politics, crime and celebrity. Find stories, updates and expert opinion. ![]() ![]() Friday The 13th - Bloodbath 016Rs 1. 96. But the telco’s subscriber base widened, which should be good news going forward as each telecom market players bleeds to retain subscribers.“On the positive side, incumbents have already started to see operating trends such as subscriber adds, data usage and prepaid top- ups improving in recent weeks versus the last few months. Overall, we believe sector revenues could decline by mid to high single digits Qo. Q in 4. QF1. 7 but see some signs of stability in 1. QF1. 8 as RJio starts charging,” the three UBS analysts said. This means the current quarter would be the key to the RJIo conundrum for India’s fragmented telecom market. A CRISIL analysis noted that sharp price cuts and free services offered by RJio for almost 6 months – accounting for over 5. While overall data traffic has grown 5 times in the past one year, 6. G data prices since launch of RJio in September has resulted in muted 2 per cent growth in adjusted gross revenue last fiscal. The same analysts have additionally pointed out that even if the incumbent biggies continue to bleed, they must strive to retain market leadership. In a note to clients, CRISIL analysts have pointed towards the financials and business dynamics of leading global telcos in key, high data consuming markets, to say there is a premium in market leadership. They have given the example of Verizon, the largest US wireless telecom player, which boasts of a sustained high market share and best- in- class network coverage in the price- competitive and mature market. Another example is Telkomsel of Indonesia, which is jointly owned by the government and Singapore- based Sing. Tel. The company has among the highest EBIDTA margins and returns anywhere, given its widespread network, and a 7. Java areas (rural areas). It also has twice the number of subscribers to its closest competitor, ensuring significant pricing advantage that also reflects in its financial profile. Ditto South Korea’s SK Telekom and Australia’s Telstra.”Returns of Indian players also indicate a similar trend. Bharti’s India operations have average returns closer to 1. So the point really is that Bharti at least should prefer bleeding to losing out on market leadership in the long run. The cries of intense competition and competitive pressures should not deflect attention away from what the market leader is doing to remain in the numero uno position. For one, Bharti’s recent shopping spree has given it added muscle. It has struck a deal to buy out Norwegian telco Telenor’s Indian operations and then signed a definitive agreement with Tikona Digital Networks to acquire its 4. G business, including the Broadband Wireless Access (“BWA”) spectrum and multiple sites. The Tikona pact is a smart buy since this acquisition will enable Bharti to fill BWA spectrum gaps in the 2. MHz band, thereby securing a pan India footprint in the band. That the future telecom wars will be fought in the fourth generation (4. G) airwaves’ space has been quite clear from the day RJio entered the market with its 4. G ready network and eye- popping freebies to lure data hungry customers away from incumbent telecom operators. RJio’s USP, besides the pricing, has been its 4. G- ready network and the speed with which Indian subscribers have ramped up data usage since Rjio’s entry last September is the stuff of legends. This rapid transformation of a primarily voice market into a rapidly scaled up data market has forced incumbent telecom operators to bolster their 4. G footprint. Now, when in addition to the RJio threat, Bharti is also set to face competition from the merged entity being formed after the merger of Vodafone India and Idea Cellular, it makes sense for the market leader to stock up on 4. G spectrum. This is precisely what it has done with the Tikona deal. So while quarterly results paint a picture of a hapless market leader struggling against an aggressive new entrant, it would be wise to also keep in mind that Bharti is quietly consolidating its leadership through acquisition of networks and spectrum.
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