We were reporting the Bharti Airtel concall live. Read about the results here. From the concall:
2:03 pm Major developments: ( Sarvjit Singh Dhillon) Company continues to invest in 3G and 4G. We have started disclosing data metrics.BWA licenses in 4 circles and 3G licenses..$165 million in acquiring Qualcomm’s 4G licenses. Enterprise value at $550 million. Launched 4G services in Kolkata and Karnataka. Bharti Infratel will benefit from data strategy. Have bought in private equity entities to make the company public. Exact details subject to market decisions. Will be taken by board of directors final decision.
2:07: Data Matrices: Over 20% subscribers are wireless data users. We expect this to continue. 3G services in 1100 cities and towns. 3.7 million are active 3G users.
Fairly satisfying quarter – 9 billion minutes on our network growth – 4% growth in a seasonally sluggish quarter.
TRAI guidelines came into force in March full quarter impact on our financials. Procesing fee has hit the industry at the wrong time..Realisations are far lower.. We are appealing to regulator to remove this cap. Capital investments Rs 2900 crore taking place.
Africa: Quarter of continued investment – topline was $5 million 17%YoY growth. 15,000 2G sites and 5,000 3G sites in Africa..1.24 million retail distribution points in Africa. 261 million global subscriber base.
Q& A Session
2:15: Sanjay Kapoor- On 2G Auction – Process of auction – These are early days- Can’t share how we’ll execute our strategy at this stage. We’re evaluating it internally.
On Mobile strategy – We increased prices last year and had announced that we won’t give up on our market positions. We had made it clear that if we have to make a choice it will be in favour of revenue market share. Bulk of the share is with bigger brands. But cancellation of licenses has lead to new players acting more aggressively.
TRAI came with regulations on combo packs and processing fee. It affected us and did not make life easy. We’re benefitting from MNP. Industry is hyper-competitive. There are some structural problems. We refrain from participating from 10p per minute etc.Industry churn has gone out of hand..Churn should be 16-17% per month. We have to fine tune and make sure that we’re relevant to the market and yet maintain our margins.
2:24: Sanjay – On aggression – it’s all mark to market- Given the first phase- we’ve done well to contain others. How aggressive we’ll be in future is not pre-determined. We mark the market on a daily, monthly, weekly basis and on a state, city, district basis.. We will never destroy value. However, we believe it is difficult for margins to erode. There is room for a fundamental correction on the way we price our products. As we move towards consolidation, there will be correction of price and behaviour.
2:30: Sanjay – Revenue kicking in – Compare revenues of industry with last year- after growing 12 billion minutes- we are not compromising on our VLR ratios..We’ve gained on MNP..We’re doing 1 million port-ins every month.
Factors that have led to depressing of revenues are at an industry level. With all the aggression we’re seeing dilution. However. it’s been fairly satisfying.
2:33 – Sanjay – Telemedia is 40%+ EBITDA margin business and we stick to that. Marginal drop happened because of more realisation in voice.
On DTH side, some adjustments happened on the way we accounted for content- DTH business has recovered from bad practices- we’re moving in the right direction.
Some changes on combo packs and processing fee – some need behavioural changes from customers. As per as the regulatory changes- whole industry faced the brunt-there’s a consultation paper, we’re approaching the regulator. We’ll pursue alternate strategies. Making sure we’re not depending on these alone.
2:43: Sanjay- Rationality of the market: we take strategic calls based on the need of the hour – We do have flexibility of playing on the revenue market share. We believe that rationality will come back to make the industry sustainable. We are at the worst times – competition is at its peak.
2:45 – Sanjay – Why the sudden acceleration in the number of 2G sites? – We rolled out more sites in the quarter than we did in the entire year..change in topography..customers residing in every nook and corner..large number of customers still use feature phones..we have to ensure data network also reaches out to these customers. We make sure we watch individual sites after the investment.
Srikant – network top line – the incremental impact of 3G sites has also contributed to costs. We also have Bangladesh and Enterprise business, which is on leased bandwidth adding to network Op-ex. Costs going up on fiber and back-haul side.
Sanjay – Recovery of revenue loss – there is a program to see how we recover EBITDA across the board.
2:51- Sanjay – On the govt’s plans to distribute free phones and minutes – The government will be paying for the free minutes and not telcos.
2:56- Sanjay – Large amount of CAPEX is going on network – so that data is enabled on more sites. Over years, we have a case to grow faster in the market. Data traffic is going up – we have aspirations to grow faster.
We level up with our peers in the market. We’ll remain mark to market.
On flip-age on traffic market share – We don’t share those numbers. We had 9 billion minutes, comparatively higher than Vodafone and Idea. We monitor these indices at a very local level.
Sarvjit – We’ll have our committee evaluate IPO conditions for Infratel and get back, This also includes Indus.
3:00 – Sanjay – On minute traction in Q2- Weakest quarter for the industry – Not going to be an exception, can’t share anything more on that. On RMS, how much of market share at what price and what bottom line – we are careful but can’t comment on the right mix.
3:04: On handset subsidies in market – Sanjay- Given the current position, where the market is prepaid, case for handset subsidies doesn’t change. Nothing prevents a customer from switching operators. We’re working with Apple, Samsung, HTC, BlackBerry, all of them. We’re finding innovative ways like reverse subsidies. Given the financial strength of the industry, we can’t offer subsidies on the lines of developed markets.