Bharti Airtel now seems to have found a new way about selling differently priced plans as compared to Reliance Jio. The telco has decided that selling to the customers who are paying as low as Rs 35 per month is just not worth the hassle. As such, the telco will now focus on catering to better-paying customers, and it is going to be the telco’s new strategy against competing with the Mukesh Ambani led telco, Reliance Jio. This move is also expected to bring in better sales and will help the company in covering administrative and other related costs.
Bharti Airtel to Focus on Increasing ARPU
If we are to go by what analysts say then this revamped strategy might click for Bharti Airtel in the hindsight. It’s also high time that Bharti Airtel takes a different approach for competing with Reliance Jio since the telco has consistently seen falling revenues and declining profit ever since Reliance Jio entered the arena. In the quarter of July-September, the net profit of Airtel went down 65% from a year earlier to Rs 119 crore, while revenue declined by 3.6% touching Rs 14,920 crore.
In the post-earnings conference call with investors, Airtel CEO, Gopal Vittal said “We have about 330-odd million customers in wireless. But if you look at the pattern of consumption... about 100 million customers have very low levels of ARPU (average revenue per user).” He further added, “So these ARPUs are at sort of low double-digit... In the last one and a half months in three circles in Tamil Nadu, UP West and Punjab, we’ve introduced minimum ARPU-led plans at the low end... We’ve seen some good results in and we’re now rolling it just now across the country—in fact, in the last seven days, we have already rolled out across the country.”
Airtel Dominates Rural Regions Reliance Jio Thrives Overall
We get to see an interesting picture while looking at the subscriber bases of both the competing telcos. According to the data published by the telecom regulator Trai, Airtel holds the highest subscriber base in rural regions with 33.44% market share whereas Reliance Jio holds 12.22% of market share in these regions. However, when speaking about the total wireless internet subscribers, the picture is very contrasting since Airtel holds 25.3% of market share, whereas Reliance Jio holds 43.8% market share.
A person aware of the matter also spoke about this move to Livemint, “Letting go of customers who recharge less than ?35 a month, particularly those who mostly receive incoming calls or do very small recharges, would also free up Airtel’s network and ease congestion. This would, in turn, improve the quality of service for high-paying users.”
This strategy of letting go low paying customers will open new doors for Airtel and will also allow the telco to reserve its infrastructure and resources for better-paying customers. Besides this, the Sunil Bharti Mittal led telco is leveraging its content partnerships with Netflix, Zee and Amazon to force customers into spending more on its plans. This is also expected to create a spike in average revenue per user as well for Airtel.
Airtel CEO, Vittal said, “... If you look forward a couple of years...we should see at the lower end, 100 million customers giving us low double-digit ARPUs compressed further by 30-40% and an ARPU upside there.” Vittal had also already clarified in the past days that Airtel wouldn’t be getting down into the field of feature phones to compete with Reliance Jio. However, for Jio it’s a good signal since the telco has managed to add an immense number of subscribers through its affordably priced JioPhone. Jio’s subscriber base has gone up from 46.6 million in end-March to 73.11 million in end-August.
Amresh Nandan, Vice president and analyst (tech) at Gartner also spoke about this new development, “The days of endless tactical fighting such as tariff wars are getting over, and telcos need to revisit their future business strategy. Bharti Airtel seems to be refining its strategy in this intensely competitive market.” He further added, “A subscriber is a source of revenue, but it is also a cost to the operator. Bharti Airtel is focusing on the segments of importance, based on their future business plans.”