wordpress blog stats
Connect with us

Hi, what are you looking for?

Airtel FY11 Concall: A Cloud Over Indian Industry; Stabilization; Africa Changes

Notes from Bharti Airtel’s FY11 conference call:

India & South Asia

– Regulatory changes & Broadband Future: “The story on the Indian front was clearly dominated by regulatory changes, some of them, very unfortunate. You may be aware of a cloud over this industry, an industry that every Indian should be proud of, is very regrettable for all of us associated with this industry. Unfortunately, because of this cloud, we’ve overlooked some of the real positive transformational changes in the indian telecom industry in the last year, mainly, the foray of India into the broadband segment. In June, we had 3G and BWA auctions. 3G has already launched in many parts of the country, and in a couple of quarters, you will find 3G as you travel all across this country. The new telecom policy is much talked about. We are certain that the new telecom policy, which is long overdue, which will take care of equity, be fair to all and will provide a level playing field, keeping in mind the future of this industry in india, with great emphasis developing data services and broadband services.”

– Stabilization: “Very clearly, this was a year which in the latter part of the year, this industry in India has stabilized. While the competition is intense, I see more rational behavior. It’s a steady industry, it was in big trouble in terms of its financials in the early part of the year, so that’s been great news. The fourth quarter has seen some very solid growth in usage.”…”It was our belief that with all the troubles and uncertainties, the strong players will emerge stronger, and I’m very pleased to say that Airtel, which was a very strong player, has actually emerged even stronger in this industry.”

– 3G: 3G has been launched in 9 circles our of 13, and others are on the cards. “We believe we’re on the verge of a broadband revolution led by 3G” 3G present in 43 cities across 9 circles. Balance are pending some clearances. We are completely ready for launches, and we should be out of the market with those services.

– Tariff & Minutes of Use: competitive intensity has started getting rationalized with a decelerated drop in tariff. We’ve benefited from the price elasticity that came through with the 1.1p drop that came in this quarter, and we’ve now carried 211 billion minutes on our network during the quarter, with 12.7 billion minutes over the previous quarters despite 2 days left in Q4. This allowed us to sustain minutes of use per customer per month at 449.”

– Rural teledensity is 33.8%, so there’s still rural potential for growth. As per VLR register data from TRAI, India has 574 million active customers as of march 11, corresponding to 71% of total market base. this indicates the fading signficance of customer market share.

– “MNP is a big win for mobile customers, it has not made any signficant impact. A total of 9 million customers have made requests uptil the end of april for porting their number. We are getting a disproportionate share of port-in of high value customers, and are leaders in terms of net customer port in gains, with recent figures being in excess of 0.525 million.”

– New Telecom Policy: “The governments policy would include delinking of spectrum from licenses revised M&A policy, and shifting to uniform license regime. we are hopeful that the new policy will provide a level playing field for all, and support the firming up of prices in the near future.”

– Sri Lanka – have over 1.8 million customers, with presence in all the 25 districts in the country, and a nationwide network of over 26000 retailers. Our revenues in Sri Lanka more than doubled during the previous year.

– In Bangladesh, we have over 3.7 million customers, with presence across 64 districts of bangladesh, and a strong distribution network of 64000 retailers

– Telemedia: “Did well with a concerted focus on non-voice revenues, which contribute over half of the total revenues of this quarter, which tell you that this is first business that is tipped to become a data centric business. We launched Broadband TV this quarter, which will enable our customers to watch Live TV across PC and laptops. We serve a customer base of 5.66 million at the end of March, representing 17% of the customer base, despite stiff competition and aggressive pricing, we continue to add every fourth customer on our network.”

Africa

– Gaining revenue marketshare: “In the last nine months, the market has done well. We have played strongly, initiated innovative tariffs, and tested elasticity in many markets with good results.” Airtel claims to have gained “revenue market share” in all the markets – more in some, less in others; the company has reported revenue-marketshare gains in in Nigeria, DRC, Zambia, Gabon.

– Impact of KYC: A stringent Know-Your-Customer (KYC) registration process has slowed the market a bit, because “KYC is far more stringent than what we see in India, and therefore all the operators are struggling to get on top of this regulatory expectation.” The current churn levels have grown a bit because of KYC registrations being imposed in many countries, but in a matter of a couple of quarters we should see normal churn.

– Network challenges and Outsourcing deals: The network capacities and coverage are still a challenge, because Airtel’s network partners are going through certain supply constraints, which I’m sure they’ll overcome very soon. “We have implanted our unique business model in Africa with some customizations. All contracts, long term contracts, for Network, IT, BPOs, shared services and VAS have been completed and signed. 800 employees have already transited to our partners in this quarter, and many more will transit in the next couple of quarters. Network partners are settling down with the new Managed Capacity and Managed services contracts. IBM is picking up very well, replicating the transformation which it did in India. Our BPO partners are gaining efficiency every month, with the same number of staff. ” Airtel says it has close to 12000 sites on the ground, with additional CAPEX and OPEX, it expects improvement in quality and enhanced coverage. It has given a guidance for CAPEX is $1-1.2 billion in the coming year, might invest more if the market needs it.

– Kenya is one of our small markets. 95% of the customers who have chosen to change their operators in the MNP process (in Kenya) are preferring to come to Airtel.

– Distribution: “The distribution FMCG deck, easy recharge, whatever we did in the last decade in India have all been initiated as positive steps in market growth, and are being systematically tracked and led in each market. in some markets, we are distribution leaders already, but our depth of distribution should be better and superior to all other companies.”

– Tariff changes and Per Minute Cost: “The great news is the per minute cost has started to decline, and I think it is a very very important start of a trend, and as it continues over the next 4-6 quarters, I’m sure Africa see more affordability coming, following this per minute cost reduction.” Tariff correction process in Africa has been completed. Airtel says that Zain had unsustainable premiums of 20-40% in many markets, and it took the company six months to correct tariffs. “We are clear that affordability is a commitment of Bharti, but it’s not a commitment to be borne in one or two quarters.”

– ARPU and Minutes of Use: “ARPU has been stable and MoU have come down by 5 minutes, due to a regulatory intervention in DRC, where the regulator had increased the tariff to 13 cents, and led to reduction in MoU. Fortunately, revenues and ARPU was stable for us. The overall minutes dropped, but if you look at MoU without DRC, we have seen a growth of 3.5% in MoU this quarter.”

– Organizational Changes: “The Bharti Airtel organization in Africa is settling well. All organizational changes have been completed, and more than 90% staffing in key functions and countries have been completed.”
– Non-Voice: The non voice revenues are very low at 7.8%, and “this is where our focus on 3G based data applications, m-commerce and VAS music etc have been initiated already.”

– 3G in Africa: “3G will be in 10 countries in Africa, and we’re enhancing our network in 7/10 countries because the past 3G network was sub-optimal. We are making it seamless in key cities, key highways and key CBD areas. Sierra Leone, Congo B and Kenya have gone 3G.

– M-Commerce: “is an independent business which we’ve launched in Africa. Kenya is the leader in M-Commerce across the work in functionality and success. We believe in the next 12 months, 8 countries will be taken up by us, and the balance eight countries in phase 2. Central Bank approvals have already been taken up these 8 countries.

– Tower subsidiary: “Africa Tower company will be a holding company, and we welcome partnerships as we have seen in India.”

– EBITDA Growth: “The EBITDA growth in Africa has started to happen, and I’m sure it’s sustainable. It’s the first time Bharti has done 5-7 big concurrent restructuring together. In India we’d done these changes over a period of 6-7 years, whereas in Africa we’re trying to do all the changes over 12-18 months. These changes will have an impact on cost structure. We believe that positive margin trajectory should continue.”

– Losses in Africa: “Six countries are in loss making positions. Most of these are turning into net income positive over the next 12 months.”

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

News

Netflix’s two day StreamFest in December 2020—where users in India could practically watch Netflix’s entire catalogue for free—brought millions of users to the service,...

News

Media company HT Media Limited posted a consolidated operational revenue of ₹341 crore, which is down 40% YoY and up 31% over the previous...

News

E-commerce marketplace IndiaMART InterMESH Ltd. reported a 34.5% increase in traffic on a year-on-year (YoY) basis, growing to 253 million in the quarter ended...

News

HDFC Bank reported a net profit of ₹8,758.3 crore, for the October to December quarter of 2020, up by 18% from ₹7416.5 crore in...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to Daily Newsletter

    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ