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Bharti Airtel lost 2.5-3 million customers in Jammu and Kashmir in Q2FY20

In the September quarter, Bharti Airtel lost 2.5 million to 3 million customers in Jammu and Kashmir, CEO Gopal Vittal revealed. “Our overall subscriber base number was also impacted due to shutdown of mobile services in Jammu and Kashmir during this quarter,” CFO Badal Bagri said. He added that the company’s revenue from mobile services would have been higher, if not for the shutdown in Jammu and Kashmir. While the company’s total customer base improved marginally from 301.4 million Q1FY20 to 304.7 million this quarter, Vittal said that Airtel acquired 6.5 million to 7 million customers from Tata Teleservices following their merger.

Vittal and Bagri’s remarks were made during a call with the investors on October 30, after the company posted a loss of Rs 23,045 crore in the September quarter — this was the company’s second quarterly loss in 14 years. At the time, the company said that the Supreme Court’s ruling on adjusted gross revenue (AGR) had “significant financial implications on the company”.

Disappointed by SC’s AGR verdict: “We were disappointed by the [AGR] verdict of the Honourable Supreme Court,” said Bagri. He added that the SC’s verdict had “come at a time when the sector is facing severe financial stress, and may further weaken the viability of the sector as a whole”. Bagri said that Airtel is hopeful that the government will take a balanced approach on the AGR matter to ensure the long-term viability of the sector.

What was SC’s verdict on AGR? Last month, the apex court had ordered telecom companies to include non-core income for calculation of Adjusted Gross Revenue (AGR), and asked them to pay Rs 92,640 crores to the Centre, which includes disputed demand, interest, and penalty. The Cellular Operators Association of India (COAI) has since then urged the Department of Telecommunications for relief.

Why ARPU remained largely flat: Despite the poor financial performance, Airtel’s average revenue per mobile user (ARPU) of Rs 128 in Q2FY20 was more than both Reliance Jio’s and Vodafone Idea’s. However, this still was a marginal decline from Rs 129 ARPU in Q1FY20. One of the reasons why ARPU slipped by Re 1 is because Tata’s customer base came with a substantially lower ARPU, Vittal said. He also explained why ARPU remained relatively flat:

  • Customers upgraded to higher-end packs as more customers joined Airtel’s 4G plans. The company’s 4G customer base increased by 8.3% QoQ to 103 million.
  • Changes were made to the minimum recharge plans, such as offering incoming facility for 7 days instead of 14 after the expiry of the recharge.

Impact of Jio phone: “We have been impacted with the advent of Jio Phone, where there has been some movement away from our feature phone customers to Jio Phone. And recently also, you would have seen that there was a significant price drop on that particular phone, that has continued to put some pressure on feature phones,” said Vittal.

Airtel has recommended to the Telecom Regulatory Authority of India (TRAI) that the applicable date for zero termination charge be moved by at least 3 years.

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