Tough Times Ahead for Bharti Airtel in India; Analysts Anticipate Higher-Than-Expected Decline in APRU

Bharti Airtel, India’s leading telecom operator’s average revenue per user or ARPU is anticipated to see a higher-than-expected decline in the next 9 to 12 months, according to industry analysis reports. They said that Reliance Jio is expected to continue with its disruptive pricing of services, which may lead to fall in Airtel’s ARPU in the country.

An ET report said that brokerage and analysts had cut Airtel’s consolidated revenue and EBITDA estimates for FY18 and FY19 on expectations of this likely decline in India ARPU.

The Sunil Mittal-led telecom operator’s ARPU has been lowered by brokerage CLSA by 4% to Rs. 146 (Rs 152) in FY18 and by 2% to Rs. 154 (Rs 158) in FY19 on the back of Airtel’s retaliatory tariffs in response to Jio’s offers. These retaliatory tariffs will continue and further hit Airtel’s operations, it added.

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CLSA also estimates a 12% yearly decline in Airtel’s EBITDA in FY18 to Rs. 31,365 crore from Rs. 35,450 crore in the previous fiscal. Further, it has lowered Airtel’s estimated consolidated revenue in FY18 and FY19 by 5% and 3% to Rs. 90,219 crore (Rs. 95,000 crore) and Rs. 98,932 crore (Rs. 1,02,200 crore), respectively, according to the report.

Morgan Stanley said that Airtel’s price response would depend on Jio’s price strategy. It expects India’s leading telco’s wireless revenue and EBITDA to remain under pressure for the next few quarters.

Another brokerage HSBC also said Airtel’s earnings are expected to remain weak in the current fiscal. It added that the telecom operator’s wireless EBITDA is likely to decline by as 15% in FY18.

In a client note, HSBC analyst Rajiv Sharma said that market recovery may be 5 to 6 quarters away versus our earlier estimate of early FY19 due to Reliance Jio’s recent ‘Dhan Dhana Dhan’ offer.

He added that telcos like Bharti Airtel, Vodafone, and Idea Cellular might also be impacted if Jio pursues an aggressive 4G feature phone strategy.

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10 Comments on "Tough Times Ahead for Bharti Airtel in India; Analysts Anticipate Higher-Than-Expected Decline in APRU"

 

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Aravind
May 13, 2017 5:34 pm 5:34 PM

Great news! Pray Airtel suffers further economic loss, and also loss of face! Karma for having looted us Indians! Thank you Jio. Jiyo Jio.

adil wadia
May 13, 2017 4:14 pm 4:14 PM

I use Jio as my primary Sim since March 2016. And its quite reliable. It reminds me of the days when I started using a mobile back in 1996, the coverage was limited and patchy. Jio is no where near that. Near universal coverage wherever I go even in rural areas. Airtel should be happy that the tipping point has not been reached yet. Once it gains critical mass, and tipping point has been reached the AVOID group is going to suffer even more.

Faruk
May 13, 2017 2:47 pm 2:47 PM

2 minutes of silence for them who uses airtel as their primary sim and use jio to call and internet as they know jio is not stable till now. Show some respect to airtel as they don’t have jio like infrastructure but still they are maintaining the quality at 345 plan.. Just had tested the limit of call 1600 minutes per week.. Actually there is no cap too… Airtel rocks… Jio socks…

Sonu
May 13, 2017 10:23 pm 10:23 PM

Faruk bhai before jio launching my phone bill was around Rs 800 including data biu with jio its Rs 100 approx, I have port my no to jio and happy with services even outside city area.

Idea88
May 13, 2017 8:18 pm 8:18 PM

2 minutes silence for all those who still paying 200-300 for 1gb 3g or 4g like in Airtel or voda4 for Postpaid still ….Airtel gone mad … everything came like never before …….U can fool sometimes , but not everytime …..Airtel days just got over ….Jio did with infrastructure and Value for money pack for all without a single discrimination in packs !!!

Manish
May 13, 2017 4:46 pm 4:46 PM

People are now dumping Airtel for poor network. Yesterday, at market some told me Airtel network is not stable. So they will port to Jio by buying new 4G Volte phone. Airtel network goes down for hours in day time. So quality wise Jio is far ahead of Airtel in our locality.

Sandy
May 13, 2017 4:05 pm 4:05 PM

You do realise that airtel 345 plan is a segmented offer and not for all. 2 min of silence to ur knowledge.
Even i have kept jio as my secondary sim due to their call issue but now I am feeling satisfied. Will port after june once susu offer will end.

Jio~Lover
May 13, 2017 3:21 pm 3:21 PM

I hope this was satire. Otherwise, really bro… really?

I used Airtel all my life but who can forget 256rs for 1 GB 3g and that too for 28 days. And yeah, calls on Landline are more than 1.50rs per minute.

I understand that Infrastructure was lacking but they never tried to upgrade or provide more services to more customers in affordable prices. It was like, top paying will enjoy all else can go to hell. If Jio can do it why didn’t they tried it?

This is called Karma.

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