As Jiophone sales rise, Bharti Airtel’s mobile revenue starts falling again

The pain for Bharti Airtel’s mobile business does not seem to be over, with the company’s India mobile revenue declining further in the September to a new low, belying expectations that it had hit bottom two quarters ago.

Total India mobile revenue fell 2.2% on quarter to Rs 10,252 cr during the quarter.

This means that the company has resumed the declining trend. In the previous, Apr-Jun quarter, the company had managed to break the cycle of a continuous decline in its mobile business since the entry of Reliance Jio into the telecom business two years ago.

It was hoped that the company’s mobile operations had found ‘bottom’ and things would look up from then on.

However, the decline in the latest quarter has put paid to such hopes.

Not surprisingly, the decline has also impacted overall India numbers for the telecom company.

Overall India revenues — including DTH and broadband businesses — too showed a slight decline (0.07%) during the quarter to Rs 14,920 cr from Rs 14,930 in the preceding three months.

India MobileIndia Overall
July-SeptApr-June%ChangeJuly-SeptApr-June%Change
Revenue102,521.00104,803.00-2.18149,198.00149,300.00-0.07
EBITDA21,468.0027,603.00-22.2342,487.0049,133.00-13.53
EBIT-15,919.00-8,782.0081.27-2,495.005,287.00-147.19
Capex58,863.0069,350.00-15.1269,036.0078,664.00-12.24
ARPU101.00106.00-4.72

HIGHER OPERATING COSTS

More worryingly, losses increased at a pace faster than the revenue decline.

The India mobile business had a loss of Rs 1,592 cr in the September quarter, before interest and tax.

In comparison, the loss was only Rs 878 cr in the preceding three months and Rs 482 cr in the three months before that.

For the India business as a whole (including non-mobile businesses), the company had a loss of Rs 250 cr prior to interest and tax costs, compared to a profit of Rs 529 cr in the preceding three months.

Besides the decline in mobile revenue, a sharp increase in ‘network operating costs’ in India contributed to the jump in losses.

Network operating costs in the India business jumped to Rs 4,369 cr from Rs 3,947 in the preceding quarter.

The declining revenue also impacted the company’s average revenue per user or ARPU.

JIOPHONE IMPACT?

Mobile ARPU fell to Rs 101 per month from Rs 106 in the preceding quarter and Rs 116 in the three months before that — drawing ever so close to the psychologically important Rs 100 mark.

This was despite a decline in its total mobile subscribers in India to 32.97 cr (330 mln) from 33.63 cr three months earlier.

Part of the reason for the decline could be the pressure exerted by Jiophone, the ultra-cheap featurephone competitor from competitor Reliance Jio.

Speaking at a function today, Jio’s Chairman Mukesh Ambani said his company had sold 50 million (5 cr) such affordable devices in the last eight months.

The increasing popularity of the Jiophone exerts pressure on Airtel’s voice sales, as the Jiophone offers unlimited calls at just Rs 49 per month — less than half of what Airtel charges.

Meanwhile, consumption of data continued to increase on Airtel’s network, putting pressure on operating costs.

Total data carried by the mobile network jumped 24% in three months to about 2.6 million terabytes during the period. Still, it was only about one third of the 7.7 million TB carried by Reliance Jio during the same three months.

Voice consumption, however, seemed to be stabilizing, and rose only 1.3% on quarter to 693 billion minutes, suggesting that soaring Jiophone sales may be having some impact on the company. For comparison, Jio carried 534 bln minutes during the same three months.

Airtel has been trying hard to convert as many of its customers into 4G data customers as possible.

During the quarter, it managed to sign up 7.5 mln new 4G data customers, taking the total to about 65.7 mln. For comparison, Jio is estimated to have around 200 mln 4G data customers.

(Now you can get topic-based alerts via WhatsApp)