Bharti Airtel is better prepared with its 4G plans to compete with Mukesh Ambani-owned Reliance Jio, according to a report by Deutsche Bank Markets Research. The research report said that it does not anticipate any impact on Airtel’s revenue share or margins from the Jio launch.
Reliance Jio’s full commercial launch is expected by December this year. However, media reports suggest that the telco will soon soft launch its services in select cities in the country.
The report said that there are parallels between Jio’s current playbook and Reliance Communications’ launch in 2003.
“The executive management is the same in both instances. Reliance Communications’ pan-India launch was on a scale comparable to that of the incumbents and it surpassed Bharti’s voice throughout within three years. However, Bharti’s revenue share and margins were not affected by its entry. Bharti appears better prepared this time and, contrary to investor expectations,” the report said.
Deutsche Bank Markets Research, in a note, said that it doesn’t anticipate any impact on Bharti’s revenue share or margins from Jio’s launch.
“We believe Bharti’s business performance is poised for multi-year improvement,” it added.
Bharti Airtel has been strategic in acquiring the largest amount of incremental spectrum since 2014, which has helped it to pre-empt Jio by launching 4G on a pan-India basis and increase the competitive gap with incumbent peers, which remain spectrum constrained in their key markets, Deutsche Bank Market Research stated.
The report said that Jio will impact data yields but not the revenue table of the sector.
“We expect data yield to fall 20% per annum for next three years to reach Rs.0.12 per MB compared to the current level of Rs 0.24 per MB. However, we believe Jio will not affect package pricing — it is likely to offer more data at existing price points.”
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