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Airtel Looking To Shift To Content-Based Data Plans


Our telecom operator earnings coverage is brought to you by OnMobile Global, India’s leading Mobile Value Added Services [VAS] company

In an attempt to increase data usage in India, India’s largest telco Airtel is looking to shift its focus from a data-oriented approach to a more content-based approach, the company’s India CEO and Joint managing director Gopal Vittal disclosed during its earnings conference call for the quarter ended December 31, 2013 (Q3-FY14).

Vittal says they are trying to change the vocabulary away from megabytes and gigabytes into songs and videos with initiatives like the Re 1 Entertainment store launched in August last year. He claims a significant percentage of its new users are coming in through this store, although there are no specific numbers on this.

Remember that the telco has been witnessing a significant increase in its mobile data subscriptions for the past few quarters. Last August, it had mentioned that data is hitting the J curve in India. Later in the year, it had also claimed to have registered substantive growth in mobile TV and other data services.

Airtel has also inked a partnership with Google to offer Airtel subscribers with free access to Google services such as Google Search, feature phone friendly version of Gmail & Google+, in a bid to drive data usage. In addition to this, Airtel has also apparently made several network investments and rolled 3G services where it feels is relevant.

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3G penetration: Only 16% – 18% of the devices on Airtel’s network are 3G compatible and a large percentage of about 100 million data enabled devices are still 2G, GPRS enabled phones. This is despite the fact that 3G handset prices are now down to about Rs 4000.

Penetration of 4G devices will continue to be lower since it is unlikely that users will be able to get a 4G devices for Rs 4,000 in the course of the next one or two years. “If you want high speed Internet you need a large screen device, you need a good camera and all these cost money”. Last month, Airtel had launched 4G LTE services for smartphones in Bangalore, although it was limited to only iPhone 5S and iPhone 5C smartphones, since only these currently support the TD-LTE 2300 MHz band on which Airtel has currently deployed its 4G service.

Due to this, Airtel expects to see a growth in data usage across 2G, 3G and 4G networks in the short term. In the longer term, Airtel expects to see significant growth in its 3G and 4G services as the device ecosystems grow and network economics of more sophisticated technologies reduces the overall cost. To address this, Airtel plans to spend a lot more on 3G and fibre to improve its data network for the future.

On data pricing: Vittal believes the data prices today are already at low levels, given the cost structure. “They are the lowest in the world and perhaps much, much lower than in equivalent cost of a minute”. The telco is therefore focusing on keeping the same data prices right now and will gradually look at ways of increasing it across the country. Remember that Airtel had raised its 2G data rates by around 25%-50% in October 2013.

K Srinivas, the erstwhile President of Bharti Airtel‘s B2C business unit had also mentioned something similar in an earlier interview with Medianama. He had said – “I think 2G in India is underpriced. It is significantly below cost for the entire industry. There is tremendous amount of…tell me one country in the world which gives you 1GB for $2? On a feature phone, I want to see the number of guys who cross 2GB on a feature phone. You cannot. As your data consumption keeps going up, you need to make it reach people who are adopters of 2G. If you keep it too high, people will not upgrade. This is a way of getting people on to 2G, and then trying them to upgrade to 3G” (Read more)

Reliance Jio partnership: Responding to an analyst question on whether Airtel would be keen to share infrastructure with Reliance Jio if the latter ventures into voice based on their infrastructure sharing partnership, Vittal declined to comment specifically on it, but said they typically look for win-win partnerships rather than just bartering away its infrastructure, which is the same spirit in which the earlier deal has been done.

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Also read:

Airtel Q3-FY14 Concall: On Discounted Tariffs & Africa Operations
Airtel Has 0.1M 4G Connections & 54.4M Data Connections For Q3-FY14
Airtel 4G For Smartphones Available At 3G Tariff In Bangalore; iPhone 5s & 5c Only
– Airtel Q3-FY14: Profit of Rs 610 Crore; Mobile Internet Revenues At Rs 1736 Crore Globally

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