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BW Businessworld

Beating The Odds

Bharti Airtel continues to lead despite the sector witnessing consolidation and new entrants

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For Bharti Airtel, the third largest telecom operator in the world in terms of subscriber base and the flagship company of Sunil Mittal-led Bharti Enterprises, the fiscal that has gone by is a landmark one. It navigated the challenges with well thought-out strategies and sheer resilience amid India’s changing telecom landscape. Result? The telecom giant managed to increase its revenue market share to a record high of 33.8 per cent in the last fiscal (2016-17), from 31.6 per cent in the year before. What’s noteworthy is the fact that the company could carve out a growth trajectory for itself when the overall sector witnessed a spate of consolidation, rapid growth and disruption — all in the same breath.

“Only one word comes to my mind for the telecom industry in 2017 and that is consolidation,” says Deven R. Choksey, MD, KR Choksey Investment Managers. After all, the entry of Reliance Jio in 2016 took the cellular industry by storm. While it put a lot of pressure on the average revenue per user (ARPU) of large players, for smaller/mid-sized companies, it made the journey even more unviable. Sample this: several large deals were announced in the past one year, which included mergers such as Vodafone-Idea and Tata Tele-Bharti.

“The main idea of consolidation is to manage the ARPU and customer base, which has been declining at the rate of at least 3-5 per cent quarter-on-quarter since Jio’s entry,” says Choksey. “With Tata Telecom and Reliance Communications logging out, and Vodafone and Idea merging operations, now only Bharti Airtel and Reliance Jio are the major market shareholders,” he adds.  

This perhaps explains Bharti Airtel’s presence in the top 10 list of BW 500. So, what made it work for Bharti Airtel? In FY17, Bharti Airtel continued with its network transformation programme under ‘Project Leap’ that it launched in 2015 wherein it announced a whopping Rs 60,000 crore worth of investment. Besides, it saw one of the largest network rollouts globally — 180,000 mobile sites — in the preceding two years. In FY17, Bharti Airtel emerged as the only industry player in India, with both 3G and 4G services in all 22 circles.  Bharti Airtel  also launched Airtel Payments Bank in partnership with Kotak Mahindra Bank in January, thereby becoming one of the first licensees to go live in the country.

As of FY17, Bharti’s domestic mobile business clocked revenues worth 55 per cent, African operations brought in another 21 per cent and the balance came in from tower infrastructure, digital TV and other services, Choksey points out. Currently, Bharti Airtel operates in as many as 17 countries and has partnerships with content providers such as Netflix and Amazon among others. This is a strategic move as the fate of telecom service providers lies not only in providing mobile data but also in fostering greater investments in content and technology in the future. Going by highest revenue and subscriber market share, Bharti Airtel is the No. 1 telecom company in India. In fact, it is the only integrated operator with wireless, wireline and satellite TV. It has a giant presence in Africa, too, where it is the No. 2 telecom operator. Its cumulative investment in telecom stands at over $47 billion.

It sure is an interesting time for the sector as it is going through a consolidation phase that it witnessed way back in the early 2000s, where only 4-5 players remained. In short, it is a repeat that will see the survival of the fittest.