Bharti Airtel’s share of the GSM space may have come off from 35 per cent six months ago to 25 per cent currently and its net subscriber additions in March may have been lower than those for Vodafone. But it refuses to take part of the price war: instead it wants to focus on revenue market share and protect its profitability.
The telco already enjoys revenue market share in 14 out of the 22 circles and commands an ARPU that is among the highest in the industry. Of course, ARPUs may fall –in the March 2009 quarter the drop may be over 5 per cent with some of its pre-paid customers shifting to Reliance Communications to take advantage of the free minutes offered by the latter.
However, in the long run, not playing the price game should pay off. The stock has underperformed the market since the start of the year and earnings estimates have been downgraded because of the fierce competition and regulatory changes. At an ev/ebitda of under 7 times for 2009-10 estimated numbers, the stock is attractively valued.
