Bharti Airtel Set to Double Down on Broadband Services

Motilal Oswal in its report said that the Airtel broadband services is poised for growth

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Bharti Airtel, the second-largest wired broadband provider in India will be “doubling down” on its broadband services through multiple points including “rapid expansion” of its service areas in the upcoming quarters. The development was shared by Gopal Vittal, CEO of Bharti Airtel in the second-quarter earnings call on Wednesday with Vittal highlighting that the broadband services is “at a cusp in terms of growth.” Vittal highlighted that the company added “one million home passes during the quarter” in the cities where the Airtel currently offers its services.

Airtel Witnesses “Rapid Increase” in Broadband Consumption

The CEO of Bharti Airtel also said that the company would accelerate its Local Cable Operator (LCO) partnership model. The second-largest wired broadband provider in India is currently offering its services across 145 cities in India including 28 cities where Airtel unveiled its services in its second quarter. In its quarterly report, Airtel highlighted that its LCO model is currently live in 48 cities across India.

“I believe that the broadband category is at a cusp in terms of growth. With Covid as the trigger point, we are seeing a rapid increase in work from home, in online education and in streaming services,” Vittal said in the earnings call. “All of these need reliable high-speed broadband.”

Vittal said that the company would be introducing the “full power” of its Airtel services along with its “partner services to deliver an integrated converged offer encompassing connectivity, entertainment and more.”

The operator in early September revamped its Xstream Fiber plans with Airtel introducing an Xstream Bundle enabling users to opt for Airtel Xstream Set-Top Box (STB) for Rs 1500 refundable deposit.

“Finally, an adjustment in entry prices due to competitive reasons towards the end of the quarter,” Vittal said in the earnings call. “As a result, we saw growing momentum across the quarter while adding close to 130,000 customers.”

Analyst Expects Airtel to Face APRU Pressure in Days Ahead

Airtel on Tuesday highlighted in its earnings release that its Airtel Business and Homes segment witnessed 7.5% and 7.3% year-over-year (YoY) revenue growth respectively. In its quarterly report, the operator highlighted that its Homes services registered an average revenue per user (ARPU) of Rs 783 in its second quarter as compared to Rs 802 in the previous quarter.

Axis Securities in a report on Thursday said that the operator will witness further pressure on its ARPU in its Homes segment despite witnessing a “good traction” in the second quarter.

“Traction in Homes was led by (i) increased demand from Work-from-Home, streaming; online education; (ii) converged offering including Airtel Xtreme; (iii) adjustment of entry pricing; and (iv) LCO partnerships in 29 new cities for the last mile connectivity,” Axis Securities said in its report. “Price reduction is not reflected in Q2 number and there will be some pressure on ARPU going forward.”

Motilal Oswal in its report also released on Thursday said that the Airtel broadband services is “poised for growth” with the segment said to be “driven by the new LCO distribution model.”

The operator in its first-quarter report for the period ended June 2020, highlighted that LCO model was live in 14 cities across India. The users in LCO cities were earlier offered advance rental packs with the plans carrying speeds in the range of 16 Mbps to 300 Mbps. However, in early August, Airtel introduced the pan India plans even in its LCO cities. Alwar, Bareilly, Dehradun, Jammu, Katra, Nashik, Prayagraj, Rajahmundry and Sikar are some of the cities with Xstream Fiber services under the LCO model.

Born in India, Yogesh loves to travel and has lived in multiple countries including New Zealand and Canada. His bylines can be found on various newspapers and blogs throughout the world, including Vancouver Sun, Surrey Now-Leader, Daily Hive , Investing News Network and Rach F1.

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