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Airtel Says Data In India Hitting The J Curve In India; Notes From Q1-FY14 Concall

The J curve is coming into play for data in India, Bharti Airtel said during its earnings conference call for the first quarter of financial year, ending June 30th 2013 (Q1-FY14). Mobile Internet users for the company are growing at a healthy pace – data users for the company grew 7% quarter on quarter to 46.5 million, accounting for about 25% of its overall data base. Data revenues grew over 90% year on year to around Rs 850 crore, and usage grew 117% according to the company. Some part of this might be down to pricing changes: Airtel brought data rates for both the pay-as-you-go and pay-as-you-go rates for data packs during the quarter. The company said that the move by one of their competitors to reduce pack rates themselves is unsustainable.

Airtel was impacted by the interim verdict of India’s Supreme Court, which did not allow it to add more 3G customers where it was not allocated spectrum, but was still operating 3G services via ICR (inter-connect-regime) arrangements. This explains why it added only 0.4 million 3G connections between April and June, while adding 2.7 million 2G customers. The numbers for Q1-FY14, in comparison with the preceding quarter (Q4-FY13):

– Total Mobile Internet connections: 46.58 million, up 7% from 43.49 million.
– Mobile Internet connections added: 3.09 million versus 2.81 million.
– 3G connections: 6.8 million, up 0.4 million from 6.4 million.
– 2G connections: 39.8 million, up 2.7 million from 37.1 million
– As percentage of total connections: 24.4% of total up from 23.1%.
– Data usage: 27,271 million MBs of data transferred, up 14%.
– Data usage per data customer: 203 MB, up 8% from Rs 187.
– Data ARPU: up 15% to Rs 63 per data user, from Rs 55.
– Data realization per MB: Rs 0.31, up from Rs 0.29.
– Data as a percentage of total revenue: up to 7.4% from 6.5%.

On the status of Mobile Value Added Services, Airtel said that it has implemented most of the regulatory guidelines, but some intervention is required regarding “single point WAP downloads”, and the impact of that would be seen in the subsequent (current) quarter)

Notes from the concall:

Telephony (India)
– There has been reduction in expenditure and elimination of low-yielding or non-yielding usage on voice and data
– Revenue per minute is up by 1.39 paise, up 4% QoQ, with Minutes of Usage stable. The increase in RPM has led to no reduction in volume, and in fact, there has been a marginal increase in volume by 5 billion minutes.
– The headline tariffs are in the ballpark of 0.90 paise, and there is very clear headroom to continue to reduce discounted tariffs.

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– regulatory changes in Africa, especially mobile termination rates, impacted gross revenue in Nigeria, DRC and Tanzania.
– Nigeria saw a 30% tariff reduction in the last year, and market revenue down by as much as 90% because of two more reasons: three states were closed down (two of which have since been opened), and the entire industry were impacted. Due to KYC, many customers were disconnected, and there was an impact of mobile termination rate cut. Still, high double digit growth might be possible.
– Quarter-on-quarter it has been largely sustained despite the issues that we faced largely in Nigeria.
– 3G services are live in 14 countries, with recent launches in Burkina Faso and DRC.
– Airtel Money is now integrated in all GSM packages. It has also been launched in all Francophone markets. The platform is now stable. Performance KPI’s will be shared next quarter.
– Francophone markets will keep a steady growth rates, while Anglo markets have had a comparatively higher growth rate.
– Airtel introduced bundles in 8-10 markets, for voice, data and Airtel Money. When these bundles are used, the tariff isn’t reduced but the realized rate comes down. The usage is up, and in some markets, Airtel is doing millions of bundles.
– Multi-SIM’s have gone down in Tanzania because off-net calls are close to on-net calls in terms of costs.
– Data in Africa: 17% of overall revenues is non-voice (data + VAS + SMS), and over 24% of that base is from Data. Data revenue has increased by over 65% year on year.

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