Average revenue per user, the performance indicator that reveals how much a telco earns from a subscriber, fell by Rs. 94 for the largest cellular operator in India Bharti Airtel to Rs. 230 (less than $5) year on year; this is also down 8.7% from the previous quarter, double the 4 percent drop experienced by Idea Cellular, whose ARPU is at Rs. 200.
Average realisation per customer per minute has also crashed to 52 paise, compared to the 51 paise recorded by Idea this quarter. Traffic on network have increased by 9.56 billion minutes.
SMS Revenues Up; Churn At 6.5%
Interestingly, SMS revenues as a percentage of total mobile revenues have increased to 6 percent from 4.9 percent in the previous quarter and 4.1 percent in the December 08 quarter. Non Voice Revenue, which includes Short Messaging Service (SMS), voice mail service, call management and other
value added services like Hello Tunes, Music on Demand and Airtel Live, now contributes to 11 percent of Airtel’s mobile revenues, up from 9.8% in the previous quarter and from 9.5% in the December 2008 quarter.
Sunil Bharti Mittal, Chairman & Managing Director, Bharti Airtel Limited, lends the tone of gravity to the situation in the earnings release issued, saying the sector is facing hyper competition and that Airtel is “maintaining its drive for internal efficiencies by leveraging its scale economics”. The company now has a total of 120.23 million mobile customers and operates in India, Sri Lanka (where it rolled out in 2008) and Bangladesh (with the recent Warid takeover). The operator saw its mobile user base growing 8 percent to 120,231,000 in the quarter – in India, it has 118,864,031 subscribers of its GSM services. It has a customer market share of 22.7% of the Indian wireless market as of December 31, 2009.
Post-paid customers contributed 4.7% to the overall customer base. Prepaid Churn has shot up to 6.5 percent from 4.6 percent in the previous quarter while voluntary churn from post paid customers has risen to 1 percent from 0.9 percent in September quarter.
For the second quarter in a row, Bharti Airtel has experienced a sequential decline in net profits – in the last quarter, it was almost 8 percent and this time it’s 4.8 percent down to Rs. 22 billion. Revenues have again fallen marginally to Rs. 97.7 billion and EBITDA margins dropped to 40 percent after a hop in the September quarter to 42 percent. EBITDA is at Rs. 39.1 billion, down 1 percent year on year.
Employee costs have reduced significantly to Rs. 4,007 million compared to the Rs. 4,311 million recorded in the same period last year. The company has also spent less on license fees, revenue share and spectrum charges in the quarter at Rs. 9935 million, which is down 2.8 percent sequentially. Costs from network operations have increased 6.3 percent to Rs. 19,813 million.
Tower Subsidiary May Go Public
Bharti Infratel has 29,806 towers in 11 circles and its subsidiary Bharti Infratel also holds 42% share in the joint venture with Vodafone Essar and Idea Cellular called Indus Towers. Of Indus’ 102,696 towers, 35,066 are Airtel’s. According to Business Line, Bharti Enterprises Group CFO Mr Manik Jhangiani has said that the company may list either one of these units on the stock exchanges in the next fiscal.
Airtel added 61,000 customers to its Telemedia business, which runs DTH service Airtel Digital TV, broadband services and IPTV, in the quarter and now has 2.989 million customers. 41.5% subscribe to its broadband/internet services.
Here too, ARPUs are falling -they registered a 12.2 percent year on year decline to Rs. 964, down from Rs. 989 in the September 2009 quarter. The company is now strategically targeting SMBs in cities with high revenue potential.
Revenues fell marginally for the business to Rs. 8.5 billion in the quarter.
Airtel’s national long distance infrastructure comprises of 118,337 Rkms of optical fibre, over 4,150 MPLS and SDH POPs and over 1,700 POIs with the
local exchanges. Using this, it provides long distance wholesale voice and data services to 400 carrier customers. It recently launched a Far-East Connect Network to serve Asia and the Pacific; the network opens up direct connectivity between Singapore and the US via the Asia America Gateway (AAG) cable landing in Hong Kong. Airtel also built terrestrial express connectivity to
neighboring countries such as Nepal and Bhutan.
Forays Into Content Delivery
Airtel announced a strategic tie-up with Arizona-based Limelight Networks to deliver content delivery network services for media companies in India, reports DomainB. The two companies will set up 2 new CDN points of presence in Mumbai and Chennai – Limelight has been fairly well established in India and this partnership will enable Airtel a smooth entry into the Indian CDN market.
CDN services are growing in popularity with 2 other large enterprises – Tata Communications and Reliance partnering with companies that offer the services. Tata Communications invested $11.5 million in BitGravity, a company also offering CDN services for interactive broadcasting in September and Reliance Globalcom tied up with NASDAQ listed Internap. The other company in India that offers similar services is Akamai.
DTH: Subscriber Base Grows By 49%
Interest in Bharti Airtel’s DTH service Digital TV is apparent with the number of DTH subscribers growing by 49% in the quarter and it now has 2 million users. It covers 5,000 towns. Bharti is one of the six players in the DTH market, with Tata Sky, Dish TV, Reliance’s BIG TV, Sun Direct and Videocon d2h. Tata Sky has filed a complaint to Advertising Council Of India against Airtel for the latter’s claim of superior picture quality in its TV commercial.