Airtel India CEO Gopal Vittal reveals strategies to take on Jio

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There are several reasons why Airtel India CEO Gopal Vittal and his management team is believing in the company’s proven strategies to take on Reliance Jio that has invested more than $20 billion in networks.

First and the foremost is the believe that Reliance Jio’s 4G subscriber base will grow if the uptake of 4G smartphones is significant in India. For this to happen, 4G smartphones should be affordable for majority of Indians. At present, the retail price of 4G smartphones is not affordable for majority Indians. India has more than 900 million mobile phone users.

Telecom analysts believe that Jio already amassed significant number of customers and this will grow a little bit more during the next three months. The growth in Jio 4G will slowdown because of 75 percent of India is still feature phones. The dominance of the feature phones market will continue for another 4-5 years.

Reliance Jio has around 25-30 million 4G customers and may touch subscriber base of 40 million by December-end. Jio added this significant number of 4G users thanks to its welcome offer – free data, free voice and free roaming. Jio will be stopping the welcome offer in December 2016 or later. Jio customers, who are downloading content on the free package, may continue with the network if Jio makes more compelling offers. Jio’s voice and roaming services will be free for all customers.

RELATED: Jio effect: VoLTE phone sales pick up in India

Second, Airtel believes, based on several analyst reports, some students, trading community, etc. are buying Jio SIMs. In most of the cases, Jio SIM will be the secondary connection for several Indians.

ALSO READ: Can Jio improve 4G speed in India to overtake Airtel and Idea

Airtel has revamped and rolled out company owned company operated Airtel stores across the country. Airtel has over 550 COCO stores in multiple formats across the country. These COCO stores are supplemented by over 2,400 franchisee retail stores in India.

Airtel faces slowdown

Gopal Vittal, managing director and chief executive officer of India – Bharti Airtel, in a recent analyst meet, admitted that the company faced slowdown due to Jio.

“While we are seeing a slowdown in growths sequentially due to free services being offered by a new operator, overall revenue momentum in India has been sustained during Q2 with a growth of 10.1 percent. Sustained cost efficiency led to an improvement in EBITDA margins, which expanded by 260 bps to 42.8 percent,” Gopal Vittal said.

Airtel has 62.7 million (+22.8 percent growth) data customers till September, 2016. The main worry for Airtel is the single digit growth in data ARPU. Airtel’s data ARPU increased 4.2 percent to Rs 201 in the second quarter of fiscal 2017.

Reliance Jio is handling data over 16,000 TB per day, as per Credit Suisse reports.

“If a lot of customers are going on to another network and using stuff free, then that will have some impact overall data volumes. We do not believe that competing very aggressively in pricing with something that is free is actually a response,” Gopal Vittal said.

Consolidation will support Airtel and the top telecom operators to add customer base. “This year, in the first half, we had perhaps the highest increase in market share in the first six months of this fiscal year,” said Gopal Vittal.

Airtel monitoring churn

Airtel admits that there will be some pressure on revenue because of the launch of Reliance Jio across the country.

“Every single one of the retail outlets that we cover, 1.5 million of them, we know the churn that we have from that retail outlet. Our sales force incentives are aligned to it. We use technology for it and we chase this metric of the first two-month churn. We also divided the country into 650 districts and we monitor performance at a district level,” Goptal Vittal said.

The percentage of 3G subscribers to overall subscribers and also share of postpaid as a percent of net additions is stagnating in the last two quarters.

Airtel’s Gopal Vittal has also expressed concerns on the slowing penetration on data in the last few quarters. Airtel introduced a monthly Internet pack for Rs29, allowing the customer to use it right through the month. Airtel is also investing in education and digital literacy in order to enhance data penetration.

Baburajan K
editor@telecomlead.com

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