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Notes on feature phones, the growth of 4G, Africa biz from Airtel’s Q3FY19 concall

Bharti Airtel Ltd reported consolidated operational revenues of Rs 20,519 crore in the quarter ended December 31, 2018, largely stagnant year-over-year. Consolidated net profit for the period was 31% lower YoY from Rs 560 crore to Rs 382 crore. The company has 384.65 million mobile customers world over, of which 284 million are in India and 97 million in the 12 countries in Africa.

Notes from its concall with analysts. Note that these points are paraphrased unless explicitly quoted.

General notes

  • 4G subscribers added at a higher run rate than that of the last few quarters; bundle penetration and monthly engagement increased.
  • 23,900 mobile broadband base stations were deployed in Q3, 900MHz were refarmed to 4G to provide VoLTE and data, initiated refarming of the 2100 band to 4G.
  • The company said that VoLTE traffic doubled “in a very short period of time” and that 30% of its smartphones traffic is now on VoLTE with roaming.
  • Airtel TV Premium was launched with originals and catchup content, along with content from ZEE5 and NDTV Hop, among others.
  • Net finance costs declined largely due to lower forex fluctuations in the quarter
  • Airtel saw an exceptional gain during the quarter due to deconsolidation impact of Airtel Payments Bank and litigation costs
  • Postpaid revenue has seen significant downtrading over the last 2 years as people adjust to newer plans
  • Airtel’s Gopal Vittal said that 200 of the roughly 700 districts in the country account for 80% of its industry revenues; and that it will focus on these 200 districts.
  • On the growth of 4G: In the the next 2 to 3 years, you’ll have about 600 million to 700 million customers with 4G smartphones … when you take a slightly longer view, a very large part of this market will be sitting on 4G.”
  • There was a reduction in rate of revenue decline due to high value customer retention initiatives in India; EBITDA declined 15.4% due to opex headwinds due to higher network costs

On minimum ARPU plans

  • Customer base reduced due to launch of minimum ARPU plans, but ARPU increased as a result. The company lost 49 million customers who were bringing in only incoming calls.
  • ARPU of Rs 118 was due to minimum ARPU launch, increasing prices for an unlimited and calling pack from Rs 99 to Rs 119, and due to content packaging as part of AirtelThanks

On the growth of feature phones

  • On JioPhone: “there has been some gain that competition has seen because of the subsidy that they’re running on the 4G phone”
  • Airtel CEO and MD Gopal Vittal explained that the 100 million smartphones being added every year incrementally cost higher than Rs 6,000. Unlike in most consumer categories where the largest volume is the lowest price segment, the lowest segment in smartphones is a small segment. “The largest segment is between Rs 6000 to 10,000… What this suggests is that people are looking for good quality devices because [for] Rs 6,000 to Rs 10,00 you see devices between 4.5- inch and 5-inch screens. They’re looking for good cameras. And the reason, I think that is so is that this is such an intrinsic part of their lives where people spend almost 4 hours a day looking at their devices. The desire to upgrade and buy something aspirational, I think, is there.”

Traffic & capacity growth

  • The 900 band spectrum is being refarmed from 2G to 4G in 10 of our circles to increase capacity, along with refarming of the 2100 band.


  • Enterprise capital increased given the acquisition of MENA cable assets
  • Network costs increased due to the rollout of 4,000 towers and installation of 10,000 4G BTS
  • There was a marginal impact due to tenancy losses of all the tower companies purely on account of the Vodafone exit this quarter

Regulation in India

  • On the Indus-Infratel merger: CCI and SEBI have approved the merger, and the first motion was moved at the National Company Law Tribunal; shareholder meetings convened
  • TATA – NCLT has approved the deal, while DoT approval is pending

Notes on Africa operations

  • Africa is PAT positive for the 3rd consecutive quarter,
  • Data usage increased 60.7% YoY, with average data consumption of 1.25GB per month
  • Airtel Money throughput increased 29% YoY
  • 15,700 mobile broadband towers, 30,00 mobile broadband base stations
  • Regulation: Central Bank of Nigeria issued guidelines for license of payment service banks
  • Airtel CEO and MD for Africa Raghunath Mandava said that Airtel is a 14-country portfolio in Africa. Given that some countries are low on both EBITDA and market share, there’s an opportunity for growth on revenue and margins.
  • “The second one that gives us opportunity is that as revenue continues to grow in double digits, there will be a flow through that will come through. Third is, we have also started getting some good jumps on Airtel Money, and that is a good margin business,” Mandava added.

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