17 Companies Airtel Gears Up for Battle to Protect ARPU

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Companies

Kalyan.Parbat@timesgroup.com

Kolkata: Bharti Airtel is bra-cing for a gruelling battle toprotect its average revenue peruser (ARPU) and maximisingrevenue market share (RMS),as the telecom market leadertries to weather the brutal im-pact of Reliance Jio Info-comm’s free services that itcalls “predatory” and expectsto continue through March.

The company is also lookingto monetise tower assets in fiveAfrican markets — having al-ready done so in 10 out of the 15it is present in — to generate anadditional up to $600 million(.̀ 4,080 crore) to beef up its warchest as the price war with Mu-kesh Ambani-controlled Jio isexpected to escalate.

“With predatory pricing unle-ashed by an operator, it’s goingto be an ARPU game going for-ward, and all about maximisingRMS in an industry that will seerapid consolidation over thenext 12-15 months,” managingdirector for India & South AsiaGopal Vittal said on Wednesday,without naming Jio.

He expects the total number oftelecom players to “shrink ra-pidly in the short-to-mediumterm” as smaller operators arelikely to increasingly struggleagainst the Big 4 of Airtel, Voda-fone India, Idea Cellular and Jioin rolling out comparable bro-adband networks and also facebigger financial challenges.

Vittal was speaking on an ear-nings call a day after the com-pany reported a 55% fall inthird-quarter net profit to .̀ 504crore — its worst in four years— amid a first ever on-year re-venue drop, hit by the impactof Jio’s free services and partlydue to demonetisation.

Analysts said No. 3 Idea,which is expected to report re-sults shortly, could perform alot worse than the market lea-der, with most estimating a netloss, which will be the first everin the telco’s history.

Vittal said Airtel’s immediateobjective would be coming up

with innovative “bucket plansthat deliver value and lock theright ARPU customers” into itsnetwork and grow RMS, whichwould be the key performancemetric, going forward. Airtel’sARPU in the just-ended quarterfell 8.4% sequentially to .̀ 172.

Brushing aside analyst con-cerns about plunging data re-venue yields at .̀ 50 per GB, hitby Jio’s freebies, Vittal saidthere’s adequate data elastici-ty in the market, which can stillpave the way for greater dataconsumption, and in turn, helpmaintain ARPU levels.

Vittal ruled out the immedia-te possibility of Airtel unvei-ling an aggressively priced 4Gfeature phone to take on Jio, as-serting that such a device is un-likely to appeal to serious datacustomers and will primarilybe sought out by people lookingfor cheap data. Jio’s parent Re-liance Industries is believed tobe working on an ultra-cheap4G feature phone to attract mo-re subscribers at the lower end.

The market leader’s global fi-nance head, Nilanjan Roy, saidthe telco’s consolidated capitalexpenditure guidance for fi-scal 2017 will likely be a tad be-low $3 billion.

Airtel GearsUp for Battle toProtect ARPU

Airtel also looks to monetise tower assets in 5 African markets — having already done so in 10 out of 15 it is present in

Telco to generate additional `4,080 crto beef up war chest

Co’s ARPU in the just-ended quarter fell 8.4%sequentiallyto `172

Charging Up

Gulveen.Aulakh@timesgroup.com

New Delhi: Mobile-phone ma-kers operating in India are loo-king up to next week’s UnionBudget for localisation incenti-ves to help achieve the govern-ment’s ‘Make In India’ objecti-ve and to overcome demanddisruption concerns broughtabout by recent currency cont-rols and imminent changes inthe indirect-tax structure.

“A ten-year tax holiday for lo-cal mobile manufacturers,continued diffe-rential dutystructure to enco-urage enhanced local manu-facturing in India and an in-crease in incentives under theMerchandise Exports fromIndia Scheme (MEIS) schemeto five percent from the cur-rent level of two percent wo-uld go a long way in makingIndia an export hub,” said Ri-tesh Suneja, Group Chief Fi-nancial Officer at Lava.

Suneja echoes the sentimentof an industry that requirespolicy support to make mobi-le-phone handsets cheaper inAsia’s third-biggest economy,where the government is see-king to draw capital in indu-stries as diverse as electronicsand defence equipment to

strengthen the manufactu-ring base. Tax holidays and du-ty exemptions on capital goodsimports are other items on thewishlist of companies that arepotentially at the vanguard ofefforts to make India an exporthub for electronics.

Mobile phones are at the fo-refront of Prime Minister Na-rendra Modi’s ‘Make In India’initiative, and tangible locali-sation for the industry has led

companies and in-dustry lobby-gro-ups to seek similar

incentives for related pro-ducts. Industry expects localmanufacturing to feature pro-minently of the Union budgetagenda ahead of the proposedimplementation of the Goodsand Services Tax (GST),which is billed as the biggesttax reforms in independentIndia. The Budget follows thedemonetization initiative an-nounced Nov. 8.

Furthermore, the industrywants the February 1 UnionBudget to redraw electronic-waste norms which put the onusof managing end-of-life electro-nic products on producers – so-mething the industry believes isregressive and arbitrary.

Handset Makers SeekLocalisation IncentivesBudget sops will

help achieve the

govt’s Make in India

objective, say cos

Budget 2017

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