During Bharti Airtel’s first quarter ended June 30, 2023, earnings call, Gopal Vittal, Managing Director and Chief Executive Officer, outlined a growth strategy that promises to reshape the company’s trajectory in the highly competitive telecommunications landscape. Airtel‘s earnings call shed light on a multi-faceted approach that centres around premiumisation, data monetisation, and the ongoing 5G rollout, which are considered growth levers by Gopal Vittal.
The growth levers discussed include various strategies and initiatives that the company is implementing to drive revenue and increase average revenue per user (ARPU). These levers are intended to stimulate growth and improve the company’s performance. Let’s delve into the core growth levers that we see highlighted by CEO Gopal Vittal and gain insights into the same.
Premiumisation Strategy
Bharti Airtel aims to focus on premium customers and drive revenue growth by upgrading feature phone users to smartphones and encouraging prepaid customers to switch to postpaid plans. According to Airtel, these upgrades are expected to lead to higher average revenue per user (ARPU) as smartphone plans typically offer more data and services. As per Airtel, an entry-level smartphone plan commands an ARPU approximately 50-60 percent higher than the corresponding feature phone plan.
Bharti Airtel is focused on increasing postpaid net additions, which typically result in higher ARPU. The company’s efforts include offering attractive postpaid plans, providing superior customer experiences through simple digital journeys, and expanding its postpaid customer base. Airtel said its Infinity family postpaid plans encourage multiple members of a household to subscribe to postpaid services on the same plan as reported by TelecomTalk. This approach helps reach higher ARPU as more lines are added to a single account.
Bharti Airtel said it is actively offering additional data packs or plans to users who exhaust their data allowance, allowing them to purchase more data on an impulse basis. This strategy aims to capture incremental revenue from data-hungry users. TelecomTalk has already covered this strategy from our perspective in our stories.
Airtel said it is continuously working on improving international roaming services, particularly for prepaid customers. Simplified pricing, personalised messaging, and ease of access aim to increase the penetration of international roaming, contributing to revenue growth. According to Airtel, enhancing the international roaming experience could drive higher ARPU, especially for postpaid users who travel frequently. Airtel has launched its refreshed New International Roaming Packs, which are valid in over 180-plus countries, as reported by TelecomTalk in December 2022.
Network Expansion, 5G Rollout, Capacity
Expanding network coverage, especially in rural areas, to tap into underserved markets. By providing network access to more users, the company aims to attract new subscribers and increase ARPU. The linked story below provides some insights about the same.
Regarding 5G, Bharti Airtel is currently deploying 5G technology and expects a significant boost in data capacity in comparison to 4G. The adoption of 5G is expected to drive revenue growth as customers experience enhanced data speeds and capabilities. Airtel sees 5G as a pivot to drive monetisation to increase ARPU, especially through the postpaid segment.
Cost Optimisation
Bharti Airtel said the company is committed to optimising costs across its operations, including network operating expenses. By reducing costs, the company aims to improve margins and overall profitability.
While significant increases in ARPU would require a tariff reset, Bharti Airtel is strategically implementing gradual tariff increases across different segments to contribute to ARPU growth over time. An example is Airtel’s entry-level tariff correction from Rs 99 plan to Rs 155 across all 22 circles, as reported by TelecomTalk.
Fixed Wireless Access (FWA)
Bharti Airtel is exploring opportunities in the fixed broadband segment, including FWA. While the economics of FWA are currently challenging due to higher equipment costs, Bharti Airtel is actively piloting FWA services in certain cities to assess the market potential.
The recent launch of Xstream AirFiber – India’s 1st wireless home Wi-Fi service powered by Airtel 5G Plus in Mumbai and Delhi is part of the same. Airtel’s FWA strategy is already reported by TelecomTalk earlier.
These growth levers represent strategic approaches to drive revenue growth and improve ARPU over time. Bharti Airtel aims to utilise these levers in a coordinated manner to achieve its financial goals and enhance its competitive position in the market.
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