HOME > BUSINESS > Bharti Airtel is successfully adopting the Reliance Jio model

Bharti Airtel is successfully adopting the Reliance Jio model

It is not every day that a new entrant forces the established players in the market to overhaul their business models. But Reliance Jio seems to be doing just that, and rivals like Bharti Airtel are proving to be quick, if slightly unwilling, learners.

In the three months from January to March this year, Airtel saw an eye-watering 32% fall in the price of its data sold in the market, accompanied by a 17% decline in the price of voice calls, according to the numbers released by the company late last night.

Typically, that should have implied a steep fall in the company’s revenue and profit. But surprisingly, the company’s mobile revenues in India fell only by 6%.

The reason? There was a big surge in traffic as consumers lapped up the cheaper data and voice offerings.

PRICE FALL

In the three months to March, Bharti Airtel was getting about 12.20 paise for every MB of data it sold, compared with 17.97 paise in the previous three months and 22.87 paise in the same three months of the last year.

This represents a halving of data price in the last one year.

Similarly, it was able to get only 24.28 paise for every minute of voice call carried on its network in India, down 17% from 29.42 paise in the previous three months.

These declines are the result of cheap tariff unveiled by Reliance Jio, a new entrant that has taken the market by storm.

Armed with a high-capacity network, Jio is making a play on volumes while keeping prices low, betting that rivals like Idea Cellular, Vodafone and Bharti Airtel will not be able to support the kind of volumes it offers.

However, Bharti Airtel seems to be managing to keep up in terms of increasing the volumes of data and voice on its network to offset the decline in price.

In the three months ended March, there was a 31% jump in the total amount of mobile data consumed on the network. Total data jumped from 171 mln GB in October-December to 225 mln GB in January-March. Typically, the increase used to be in the 12-13% range.

In other words, when the data price fell 32%, data consumption increased 31%. That said, the increased consumption was not able to fully offset the impact of lower prices. To fully offset a decline of 32% in pricing, consumption would have to increase by 47%.

Still, even the 31% increase was able to substantially cushion the impact and limit the loss of data revenue to 11%.

The impact was very similar in the voice business too, though not quite to the same degree.

Here, voice prices fell by 17%, while the volume increased 15% — resulting in a net revenue decline of around 4.5%.

The combined effect of the two was a fall of around 6% in Bharti Airtel’s overall India mobile revenue.

The numbers indicate that Bharti Airtel may be able to make the transition to a high-volume, low-price model to compete with Reliance Jio while largely maintaining its revenue.

The key question this raises is how far Airtel will be able to imitate Jio’s volume play as it has a lower capacity network compared to Jio.

EXPANSION

To address the issue, Airtel added 20,000 3G and 4G towers in the three months. In the preceding quarter, it had added about 23,000 in the preceding three months. In the quarter before that, the addition was only 10,500 towers.

As a result of the quick additions, the number of 3G and 4G base stations on the network has gone from 1.18 lakh to 1.91 lakh in the last one year.

However, capital expenditure — money spent on equipment, spectrum and so on — was relatively low in January-March at 2,054 cr, compared to an average of 3,672 cr for the previous four quarters.

Bharti Airtel generated cash of 4,540 cr from its total operations during the quarter before tax and interest, down from 7,121 cr in the preceding three months.

Excluding working capital changes, the company was able to generate cash of 7,288 cr, down from 8,114 cr in the preceding three months and Rs 8,963 cr in the same period last year.

Follow ULTRA.news
Is the Reliance Jio’s JioPhone really free? The latest entrant to India's telecom market, Reliance Jio, has announced an unprecedented offer -- a 4G enabled phone with support for apps and videocalling for free.According to Mukesh Ambani, customers do not have to pay anything for the phone as the cost of the phone will...
JIOPHONE: Reliance Jio to give unlimited data at Rs 153 / month Reliance Jio chairman Mukesh Ambani announced the JioPhone, which aims to bring smartphone features to the candybar form factor.The phone will be given to anyone if they deposit Rs 1500 with the company. The user will get the Rs 1500 back when the device is returned after 36 ...
Reliance Jio offers phone for ‘free’, unlimited voice, data at Rs 153 Reliance Jio chairman Mukesh Ambani announced the JioPhone, which aims to bring smartphone features to the candybar form factor.The phone will be given to anyone if they deposit Rs 1500 with the company. The user will get the Rs 1500 back when the device is returned after 36 ...
WATCH HERE: Mukesh Ambani speech on Reliance Jio at AGM today Mukesh Ambani, chairman of Reliance Jio will make a 'significant announcement' about the 4G wireless service provider's offerings at 11 AM on Friday while delivering his annual speech at its parent's annual general meeting.A live webcast of Mukesh Ambani's speech at the AGM, a...
ACC net profit up 33%, sales up 18%, volume rises 10% Cement manufacturer ACC Ltd reported a 46% jump in profit before tax to Rs 482 Cr, while sales increased 18% in the first quarter to 3,329 Cr.Net profit rose 33% to 326 cr.Cement volume rose 10% on year."The Company delivered strong volume growth amidst challenging ma...
BSNL halves 2Mbps unlimited plan to Rs 599 from 1,199 Faced with a slowdown due to the emergence of the pan-India competitor Reliance Jio, state-owned Bharat Sanchar Nigam Ltd has halved the price of its unlimited 2 Mbps DSL broadband plan to 599 per month.BSNL NEW UNLIMITED BROADBAND PLANThe player was earlier offering unl...
Spectranet overtakes Airtel Broadband on Netflix speed ranking for India Netflix, the world's biggest distributor of movies, ranked Mumbai-based 7 Star cable network and Spectranet, which offers fiber broadband in several cities, as the fastest networks for prime time usage.The average speed available to Netflix was 2.77 Mbps on 7 Star cable and 2...
With tariff change, Idea Cellular 4G data now cheaper than Reliance Jio Idea 4G tariff planWith Reliance Jio raising the price of its 1GB-per-day pack from Rs 309 to Rs 399, Idea Cellular has managed to beat the new operator in this segment, though not by much.Idea Cellular offers 1GB/day for 84 days at Rs 397, making it cheaper by 2 rupees....
Reliance Jio users should recharge with new plans by Friday for continued service Most Reliance Jio 4G users have to recharge their phones by Friday, July 14 to continue uninterrupted service.This because the current offer -- Summer Surprise or Dhan Dhana Dhan -- came into effect on April 16, and will complete 90 days by Friday.The Summer Surprise pla...
RELIANCE JIO unveils NEW PLANS valid from today Reliance Jio's new tariff plansIndia's biggest wireless data provider Reliance Jio unveiled a new set of plans as it continues to migrate its customers towards paid plans.The key difference between the new plans and the previous Dhan Dhana Dhan offer is that the new plan...
LAST CHANCE: Reliance Jio’s Dhan Dhana Dhan offer ends today Today marks the last day of telecom operator Reliance Jio's Dhan Dhana Dhan promotional offer that triples the validity of 4G recharges on its platform.The offer was unveiled as a promotional scheme on April 11, and according to the law, promotional schemes can be valid only ...
RCom says telcos facing cash flow issues due to ‘go slow’ approach by banks Telecom operator Reliance Communications said companies in the sector are facing cash flow issues due to what it called a 'go slow' approach taken by banks in disbursing loans.In an update on its 'standstill agreement' with its lenders, which provides it a window of seven mon...
Reliance Jio to offer 5 GB/day for Rs 999 per month Users of the JioFi, the personal hotspot device from Reliance Jio, will be able to get a new plan that takes the free data offered per day to 5 GB.At present, the highest amount of free data that any user on the 4G service can get is 2 GB, for a payment of around Rs 500 for 2...
Reliance Jio tops in user satisfaction, but call drop concerns remain Percentage of customers giving 4 or 5 starsReliance Jio users are a happier lot than customers of other services, but call drops and network availability remain key concerns, according to a survey conducted by a market research firm Velocity MR.The firm conducted a study...
Vodafone India offers unlimited downloading for 5 hours at Rs 29 Taking a leaf from new entrant Reliance Jio's playbook, Vodafone India has announced a 'truly unlimited' five-hour data pack for Rs 29.The pack, called Vodafone SuperNight, will work between 1 AM and 6 AM and is open for prepaid customers only. It will work on both 3G and 4G...
RIL stock up as Reliance Jio proves doubters wrong, avoids an April dip in subscribers Shares of Reliance Industries rose 3.5% today -- an extraordinary move for such a large company -- after it emerged that not only did the company not lose subscribers when it made the transition from free to paid services in April, it actually added a few million.The result ...
Reliance Jio launches extra data offer on some LYF handsets Reliance Jio, the 4G operator is now offering 20% extra data to those who are using its services using a LYF branded handset.Jio offers 20% extra data on certain LYF modelsIn other words, if you are eligible to get 1 GB of data per day, you will get 1.2 GB per day on a L...
Bharti Airtel gets SEBI and stock exchange nod for Telenor acquisition Bharti Airtel said it received the approval of the Securities and Exchange Board of India, BSE and National Stock Exchange of India for its proposed merger with Telenor India. Bharti Airtel further stated that Telenor India and Airtel have today filed the joint company appli...
Jet Airways posts profit of Rs 23 cr for Q4 Jet Airways Group today announced its second successive profitable year for the year ended Mar. 31, 2017.For Q4 of FY17, the group reported a net profit of INR 23 crores. The Group reported a consolidated profit of INR 438 crores for the year. "Despite the challenges po...
RCom says looking to refinance various payments till September Anil Ambani Group's Reliance Communications said it was in talks with its lenders and partners to put off some of the instalment payments that the company had to pay until the completion of its merger with Sistema Shyam Teleservices and Aircel Cellular by September this year....
Larsen & Toubro reports 12% increase in sales, 30% in profit Larsen & Toubro recorded revenue of Rs 36,828 crore for the final quarter of the financial year, recording an increase of 12% on a y-o-y basis.The overall PAT for the quarter January to March 2017 stood at Rs 3,025 crore higher by 29.5%, as compared to Rs 2,335 crore reco...
IGL profit up 23% in fourth quarter, sales up 13% Indraprastha Gas Limited, the supplier of Compressed Natural Gas and Piped Natural Gas in the National Capital Territory of Delhi, Noida, Greater Noida & Ghaziabad today announced its Q4 results.The company’s net profit for the three months ended March increased from Rs. ...
Tech Mahindra net profit down 31% due to rupee, poor growth Tech Mahindra said its revenue fell 0.8% quarter on quarter in the three months ended March to Rs 7,495 crore, while net profit fell 31% to Rs 588 cr.In dollar terms, revenue rose 1.3% quarter on quarter and in constant currency terms, it was up 0.9% QoQ.In dollar ter...
New technology makes telecom cheaper, but hurts tower companies A technology that has been around for almost a decade is now getting deployed on a large scale by Indian telecom operators to deploy 2G, 3G and 4G networks using the same base station.A Nokia illustration on old vs new situationThis could hit the revenue and growth prosp...
Bharti Airtel to offer cheap 4G plans for all dongle users – report With new operator Reliance Jio snapping at its heels, incumbent Bharti Airtel has decided to slash its data prices for everyone with the introduction of new 4G dongle plans, Telecom Talk blog reported quoting unnamed sources.At present, Bharti Airtel does not offer any plan t...