The Sunil Bharti Mittal led telecom operator, Bharti Airtel is confident that it can grab a revenue market share (RMS) of as much as 35% up from the current levels of 32% according to the analysts. This growth will come on the cost of Vodafone Idea if the telecom operators do not receive any help from the government on the matter of Adjusted Gross Revenue (AGR). It is worth noting that brokerage firm Goldman Sachs, hosted Sunil Bharti Mittal, the chairman of the Bharti Airtel on the occasion of its CIO tour in which the executive revealed that he expects the Average Revenue Per User (ARPU), a very crucial parameter in the industry to reach Rs 200 for Bharti Airtel in the next few months, ET reported. Given some more time, the ARPU might climb as high as Rs 300 as well. To recall, the last time Bharti Airtel saw its ARPU soar above Rs 200 was back when Reliance Jio had not made its entry into the market. As opposed to that, this year, in the quarter ending September, the telecom operator had clocked an ARPU of Rs 128.
Bharti Airtel Under Immense Pressure From AGR Dues
Goldman Sachs in a recent report said, “Return on capital in Indian telecom remains low, and as per the company, ARPUs need to go up for it to improve. Bharti believes this is true even for competition.” The brokerage firm also added that Bharti Airtel believes that it can get to 35% RMS from its current level of 32% as well. However, the bigger concern right now for the telecom operators is the AGR dues which has become a burden on these companies after the Supreme Court changed the definition of AGR to include non-core items as well. This has put Bharti Airtel in dues worth Rs 35,500 crore. Now, Bharti Airtel is looking forward to receiving some relief from the government on these dues like waivers, moratoriums, or even a deferment for extending the payment deadline.
In a worse situation than Bharti Airtel is Vodafone Idea which has dues worth Rs 53,000 crore. The analysts have also noted that the telecom operators need to pay their dues before the end of January. The two telecom operators have also filed separate review petitions in the Supreme Court. If the SC dismisses these petitions and there is no relief from the government’s side, then the telcos might find it tough to pay their dues by the end of January next year. As per Morgan Stanley, this could further strengthen Airtel’s market share in the industry with a little more consolidation happening in the coming days.
Airtel Could Grab 50% of Incremental Market Share
Going by the words of Goldman Sachs, Bharti Airtel is confident of grabbing the 50% of the incremental market share in case of reallocation in the industry. Also, the brokerage has noted that this incremental market share would come at a very high EBITDA margin. Also, there is a very slim possibility of a new telecom player entering the industry.
On the other hand, the competing telecom operator Vodafone Idea has already remarked that if no relief comes its way, then it might have to shut shop. The telecom operator chairman, Kumar Mangalam Birla, remarked on the same on the sidelines of an industry event. Also, to better their financials, the telecom operators have raised tariffs by up to 40%, but despite this new tariff hike, the position of Vodafone Idea is worse off as compared to the competition.
