Telcos like Airtel to Launch New Plans and Tariffs to Protect Market Share: Moody’s

Intense competition will persist over the next 12 months as Reliance Jio is expected to remain aggressive in acquiring new subscribers and growing the data market Moody’s Investors Service said. The agency added that telcos like Bharti Airtel would launch new plans and tariffs to protect and grow market shares following intense price competition over the next several quarters.

The agency said that Bharti Airtel’s ability to expand profitability for its core Indian mobile operations relies on the company retaining its higher ARPU subscribers while increasing the pace of customer acquisitions organically and through acquisitions.

This competition will occur even though ongoing and transformative consolidation in the sector and Reliance Jio tariff plan will help stabilise the industry’s average revenue per user (ARPU) over the longer term, Moody’s added.

TRAI

Moody’s has also affirmed Bharti Airtel’s Baa3 issuer rating and senior unsecured debt ratings, as well as the Baa3 ratings on the senior unsecured notes issued by Bharti Airtel International (Netherlands) B.V., which are irrevocably and unconditionally guaranteed by Bharti. At the same time, Moody’s has changed the outlook on the ratings to negative from stable.

“While Bharti recorded 4.3% growth in reported consolidated EBITDA year-over-year at 31 March 2017, the effects of intense competition in the India mobile services segment were particularly evident in the fourth quarter, as revenues and reported EBITDA for its India mobile services segment fell 11% and 19%, respectively. This was partially offset by the year-over-year EBITDA growth in non-mobile services in India as well as healthy EBITDA growth in Africa,” said Annalisa Di Chiara, a Moody’s Vice President and Senior Credit Officer.

In addition, Airtel’s total reported debt at 31 March 2017 was Rs 1,074 billion, a rise of around 6.9% year-on-year, and largely a result of higher spectrum liabilities (Rs 439 billion versus Rs 341 billion at year end 2016).

“Leverage remained elevated at year-end, resulting in adjusted debt/EBITDA of 3.3x. We expect Bharti’s profitability to remain under pressure as competition remains at heightened levels over the near-term; as such, we believe that a permanent reduction in leverage to levels more appropriate for the Baa3 rating — such that adjusted debt/EBITDA trends to 3.0x by June 2017 — is unlikely,” added Di Chiara, also Moody’s Lead Analyst for Bharti.

For year-end 31 March 2017, the company’s Indian mobile services segment contributed around 59% of consolidated revenues and 64% of reported consolidated EBITDA and remained the key driver of profitability.

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Bharti has been able to demonstrate increasing its revenue market share for its India mobile services from to 33.1% at Dec 2017 from 31.6% as at Dec 2016, according to the Telecom Regulatory Authority of India.

“Overall, we expect consolidated adjusted EBITDA to contract around 5% year-over-year, reflecting the competitive pressures existent in the Indian mobile segment and somewhat offset by the stable operating performance of its African operations and its other business segments in India. As a result, we expect Bharti’s adjusted debt/EBITDA will increase to 3.5x-3.6x by 31 March 2018. Although, when considering the potential additional 10% stake sale in Bharti Infratel (Infratel, unrated) — at a similar valuation to its recent stake sale and with proceeds used entirely for debt reduction — we estimate adjusted debt/EBITDA of 3.4x, which remains at the higher tolerance range for the rating level,” Moody’s said.

Still, the affirmation of Bharti’s Baa3 rating continues to reflect the company’s leading market position and strong spectrum portfolio, although Moody’s stated that it remains cautious on operating performance over the next 6-12 months

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7 Comments on "Telcos like Airtel to Launch New Plans and Tariffs to Protect Market Share: Moody’s"

 

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Kunal
May 27, 2017 12:38 pm 12:38 PM
Airtel new plan details will be 1) minimum 20 to 30 % expensive then jio tariffs. 2) roaming outgoing will be charged. 3) old data plans to continue @250 per gb. 4) all plans will be in defence for customer retention against jio. 5) there will be hidden terms & conditions , where in the customer will end up paying much more over the free calling voice & data pack. 6) avoid & idea will copy same plans of airtel. In short , if you are getting decent experience on jio …prefer jio over avoid . Avoid is desperate to… Read more »
airtel s future plans
May 27, 2017 11:31 am 11:31 AM

Airtel suppose to launch pure voice plans starting from 100 to 250 where all homing/roaming outgoing voice will be free with no data. Ahead this voice + data combo plans will be launched. Where abundant will be given that range will from 250 to 1499 per month rent. This was airtel will target data users and non data users.

DUANE
May 27, 2017 11:29 am 11:29 AM

All the best Airtel… co tinue to provide quality and reliable services (I am your customer since 1999 across Kolkata, Mumbai and AP telecom circles and can vouch for the high level of quality in your services). This is my personal view and I am not paid by any marketing agency to state same.

Kaushik
May 27, 2017 10:41 pm 10:41 PM

You are a former employee of airtel and this makes your opinion non credible. Airtel in mumbai had many problems in the time you were in that city but we all know why you still use airtel so you can drop this act. I am not against airtel but they can do better than this for sure.

Sanjit Roy, Thakurnagar, wb
May 27, 2017 3:19 pm 3:19 PM
Hello Mr airtel buddy, I would like to inform you that for the last one week calls to flipkart, kotak securities, samsung care, Tata motors, sbi, axis bank and many more which I don’t know really, such toll free helpline numbers are not working from airtel even the prompt response from airtel for sbi helpline is plz check the number how disgusting is this. One of my friend who raised repeated complaints regarding this and as usual from airtel they don’t bother to fix it even they refused to acknowledge the issue, I feel pity for those people that such… Read more »
Girish Gowda
May 27, 2017 3:07 pm 3:07 PM

Means Duane is a paid agent. Confirmed.

Manish
May 28, 2017 10:59 am 10:59 AM

Yeah, he is paid agent. He is doing part time agent job after retirement from Airtel. So don’t trust any agent. Experience network by using it. If you like it then continue. Don’t fall for words by these Fraudtel Agents.

One Airtel agent got slapped by customers in my locality for cheating & misbehaving. If you see any Fraudtel agent cheating in your locality, then slap him everyone. So they won’t dare to cheat or misbehave again.

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