Bharti Needs More Data Drive

India's largest operator, Bharti Airtel Ltd. (Mumbai: BHARTIARTL), is showing the telltale signs of being a mature mobile operator -- revenues are not rising as fast as its subscriber base, its monthly average revenue per user (ARPU) is in decline, and revenues from non-voice services are increasing noticeably. (See Bharti Airtel Reports Q4 .)

At March 31, when it's financial year ended, the carrier had 137.6 million customers in India, Sri Lanka, and Bangladesh, an increase of 41 percent from a year earlier. Of those customers, 131 million were mobile users, 3.1 million were fixed line customers, and 2.6 million were digital TV customers. (See Bharti Upgrades Its DSL and Bharti Airtel Launches DVR Service.)

But despite that giant increase in the number of customers, Bharti's full-year revenues, at 396.15 billion Indian Rupees (US$8.88 billion), were up by just 7 percent, with net income up by the same level to INR91 billion ($2 billion).

As anticipated, the ARPU at Bharti's main business, its domestic mobile operation (127.6 million customers at the end of March), declined throughout the financial year as India's tariff war intensified. Monthly ARPU during the fourth quarter was INR220 ($4.93), down from INR230 ($5.15) during the third quarter, and down from INR305 ($6.83) during the fourth quarter of the previous financial year.

But while the ARPU level continues to slide, other metrics are increasing. Bharti Airtel recorded its highest ever volume of voice traffic, 19.6 billion minutes, during the fourth fiscal quarter, up 13 percent compared with the third quarter. The average minutes-of-use-per-user rate hit 468 during the fourth quarter, up from 446 in the third quarter.

And non-voice revenues are increasing at Bharti's domestic GSM mobile business too. In the fourth quarter, non-voice revenues accounted for 11.8 percent of all mobile revenues, or INR9.7 billion ($217 million), compared with 9.3 percent, or INR7.65 billion ($171 million), a year earlier.

Like all of India's mobile operators, Bharti is striving to increase its non-voice revenues in an effort to counter the fall in voice revenues and stabilize ARPU levels. And for those operators that emerge from the ongoing 3G spectrum auction with a license (of which Bharti is expected to be one), it's likely that sales from an increasing range of data applications will only increase in the coming years. (See India 3G: Bidding for Glory, Bids Flood In for India's Spectrum Auctions, and India's Smartphone Battlezone.)

But Bharti's strategic efforts are not confined to its domestic market alone. It has recently made an acquisition in Bangladesh, and is in the process of extending its empire into Africa with the acquisition of Zain Group 's African operations, a move that Bharti believes will make it the fifth-largest operator in the world. (See Bharti Secures $10.7B African Acquisition and Bharti Buys Stake in Warid.)

— Gagandeep Kaur, India Editor, Light Reading

shygye75 12/5/2012 | 4:38:05 PM
re: Bharti Needs More Data Drive Pyramid's forecast data show slow erosion of ARPU in most markets. Two main reasons: more competition and expansion into lower economic strata. New services really are the only way to correct for that erosion.
shygye75 12/5/2012 | 4:37:59 PM
re: Bharti Needs More Data Drive The overhead issue regarding licensing investment will be a huge test for operators in some emerging telecom markets. There are plenty of textbook cases on how to fail this test.
Gagandeep Kaur 12/5/2012 | 4:37:59 PM
re: Bharti Needs More Data Drive Yes, operators don't have any option but to think of innovative services to increase their revenue...with such low level of ARPUs wonder how long Indian players will take to break even their investment in 3G auction!!
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