Bharti Airtel's ARPU rises 20%, Reliance Jio's slips 3% in March quarter

Bharti Airtel has performed well on the average revenue per user (ARPU) front in the fourth quarter ended March 31, 2019, as the figure improved 20 per cent sequentially while Jio’s ARPU declined 3 per cent during the same period. 

Airtel’s ARPU in Q3 had fallen 15.50 per cent year-on-year (YoY) to Rs 104 from Rs 123 in Q3FY18.

Airtel also recorded a 4.1 per cent jump in domestic wireless revenues, partly by weaning off low revenue customers. It continued to add 4G customers, thereby narrowing the gap with Reliance Jio in terms of revenues from this segment. 

However, its slow rate of customer addition can be a cause for concern.

In the fourth quarter, Airtel’s wireless business grew 4.1 per cent sequentially to Rs 10,632 crore, indicating that the company almost bridged the gap with Reliance Jio in this segment.

Jio had posted a standalone revenue from operations at Rs 11,106 crore in the quarter ended March 31, 2019, up 7 per cent, sequentially.

Reliance Jio, Bharat Sanchar Nigam and Bharti Airtel added mobile customers while Vodafone Idea and Tata Teleservices lost customers in December 2018, according to the monthly subscriber data by the Telecom Regulatory Authority of India (Trai).

Reliance Jio added over 9.3 million mobile customers, BSNL added 982,000 and Bharti Airtel got over 100,000 new customers.

Meanwhile, Vodafone Idea lost 3.58 million mobile customers and Tata Teleservices 840,000.

The slow customer addition may prove to be a dampener for sustained revenue growth from this segment. Earlier, these users were giving zero revenue to Airtel but after the minimum recharge plan was introduced, the returns from these customers rose to Rs 20-25. For instance, if there were 100 customers earlier, 30 per cent of them were using lifetime free incoming SIMs.

“This move led to revenue growth due to increase in the ARPU as the non-paying user base reduced,” an analyst said, adding that the minimum recharge was Rs 35 and if multiplied by 50 million users in three months, it means a gain of Rs 525 crore for the company in a quarter.

However, the experts feel that Airtel may be able to sustain this rise only for a couple of quarters. Around 2009-2010, the free incoming era began and that led to the accumulation of a large number of customers.

After the entry of Reliance Jio and consolidation in the sector, the incumbents were absorbing costs of customers which were non-paying as these users clogged the network bandwidth.

Another differentiator between Airtel and Jio lay in the constitution of its subscriber base — while Jio had 100 per cent 4G consumers who are considered better quality users in terms of ARPU, for Airtel, only 34 per cent customers in its overall base were using 4G SIMs. Bharti Airtel posted a 29 per cent jump in net profit to Rs 107 crore for the quarter ended March 31, 2019, when the Street had anticipated a loss in the range of Rs 700 crore. The company said the jump was mainly due to gains from exceptional items.

Airtel, however, lost its second position (in subscriber base) to Jio in the quarter. Vodafone Idea continued to be the largest telco in the country.