Sunil Mittal-founded Bharti Airtel is “very concerned” about slowing data revenues and feels only a sharp reduction in smartphone prices to the sub-Rs 1,000 level can dramatically shore up penetration of mobile broadband levels in the short term.
Besides the slowing data revenue, Gopal Vittal, Bharti Airtel’s managing director & CEO for India & South Asia, said on Thursday that Bharti Airtel is fully prepared to face challenges thrown up by any new entrant. Without naming Reliance Jio Infocomm, Vittal said Bharti Airtel would deal with any challenge if an operator makes voice calls free on the VoLTE platform, but quickly asserted that such a strategy could never be a long term play for anyone as a telco would need to generate returns on investments.
But the key objectives for Airtel for now would be boosting data penetration and accelerating data revenues without worrying too much about realisations.
“We’ve noticed a slowdown in data penetration levels over several months and are very concerned, but at the same time, we realise that a significant increase on this score would require a market disruption of sorts in the form of a sharp reduction in smartphone prices to the Rs 500-to-600 level,” Vittal said.
He was participating in the earnings call a day after India’s leading mobile carrier reported a 31% fall in its first-quarter net profit to Rs 1,462 crore, stung by higher interest costs, capex, and forex losses amid slowing data revenue growth.
Vittal said prevailing smartphone prices are a potential barrier to data penetration. This, according to him, is since the domestic handset market, typically, sees an equal influx of both smartphones and feature phones, and many a present day feature phone user might find a smartphone priced at Rs 3,000 “unaffordable”.
The Bharti Airtel India & South Asia MD was responding to analysts’ concerns about the 2.5% sequential dip in the Airtel’s data realisations coupled with the reduced data volume growth in the April-June quarter, triggered largely by slowing data.
Bharti’s 1.1 million-odd mobile broadband subscriber additions quarter-on-quarter was the lowest in many quarters, said analysts. In fact, the percentage of Airtel customers using mobile broadband dropped to 23% in India in the April-June quarter from 23.2% in the previous three-month period, indicating that new customer additions continue to be tardy. Mobile data revenue for India during the quarter grew 35.1% on year to Rs3,525 crore, slower than the 44.5% and 50.6% growth recorded in the previous two quarters.
With the voice business which is still the mainstay but plateauing, India’s telecom industry has been looking at pricier data services to sustain growth going forward and have been expanding their 3G and putting up 4G networks across India.
To boost data penetration, Bharti Airtel teams across India are exploring ways to scale up initiatives to boost internet literacy. “We’ve already done some internet literacy pilots as part of our data growth strategy, and we will scale up such initiatives to educate people about their need for mobile internet and on ways to use it efficiently,” said Vittal.
On Bharti Airtel’s auction strategy for the upcoming spectrum sale in September, Vittal was a trifle guarded, saying the company “would essentially look to fill gaps as it already has a very solid pan-India spectrum footprint across 2G, 3G and 4G bands”.
The Bharti Airtel executive added that the company has no immediate plans to deploy VoLTE-based 4G networks, regardless of the successful trials conducted by Reliance Jio recently.
“We don’t see a desperate need to deploy VoLTE since its success would hinge on the ubiquity of 4G and the availability of sub-GHz bands,” said Vittal.
In a VoLTE, or `Voice over LTE’ scenario, voice calls, typically, are provisioned over a 4G LTE data network, instead of the circuit-switched 2G or 3G networks which are commonly used.