The scenario, they said, also underlined that Airtel has an edge over both its nearest rivals, Jio and Vodafone Idea on network quality, and that its strong ARPU growth despite the recent tariff hike further shows customers don’t mind paying a premium for quality services.
Brokerage Kotak Institutional Equities said Bharti Airtel’s 17% higher ARPU than Jio in the March quarter despite having an inferior subscribers mix “is impressive and a strong indicator of the Sunil Mittal-led telco’s higher market share in top-end subs, both postpaid and high-end prepaid”.
Kotak said Airtel’s superior show vs Jio on the ARPU front was despite less than 50% of its 283.7 million users being on 4G, unlike Jio, whose 388 million users are on the 4G-LTE platform and 70% of whom use smartphones.
Airtel’s reported a 14% on-quarter growth in its India mobility business ARPU to Rs 154 in the January-March period, while Jio’s crept up 2% sequentially to Rs 130.6.
Brokerage IIFL Securities said a reason behind “Bharti’s superior revenue growth vs. Jio” could be the nature of their subscribers. A consequence of Jio’s strategy to offer maximum value, it said, is having a higher proportion of price-sensitive customers, prone to down-trading, unlike Bharti, whose premium positioning may have left it with a higher proportion of subscribers who are less price-sensitive.
Airtel’s stock price, which had hit an all-time high a day after the telco’s India mobile business delivered robust growth in the March quarter, closed a 0.85% lower at Rs 594.05 on BSE Wednesday.
Analysts though are skeptical about Airtel’s continuing ambitions to leverage the digital platform via its commission-based partnership model, saying such a strategy might not move the needle meaningfully anytime soon or even in the medium term.
“Bharti seems to be taking a risk-free low capex approach to leverage its captive subscriber base, and its current digital strategy suggests it will have various partnerships, which may not be enough to address any meaningful new markets, which competition (read: Jio) is attempting to do by addressing new commerce, and as such there may not be any meaningful upsides from the digital strategy anytime soon for Airtel,” Rajiv Sharma, research head at SBICap Securities, said in a note seen by ET.
He, though, said things could look up once Airtel grabs more 4G users, a scenario that would increase its ability to do a lot more with the digital platform, and also incentivise it to think bigger, and possibly own a couple of verticals and go beyond the present commissions-based partnership model.
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