Bharti Airtel and India's other established operators are in for a tough year as Reliance Jio, the country's newest and most aggressive player, plans an assault on India's enterprise and home segments.
"The big thing for RJio would be to take what we have done in the consumer business into the enterprise as well as the home because we absolutely believe that India is once again deprived of where it needs to be in these areas," said Matthew Oommen, RJio's president of networks, during a recent conference dedicated to open source technologies. "So I would say stay tuned."
Bharti Airtel Ltd. (Mumbai: BHARTIARTL) is still reeling from the impact that Reliance Jio has had since entering the market in September 2016. In the final three months of 2017, its net profit fell 39.3%, while its sales were down 13%. Besides being hurt by RJio's predatory pricing, it has also taken a hit from last year's regulatory decision to lower interconnection usage charges.
But RJio has been the real problem. Owned by Indian billionaire Mukesh Ambani, the company has been offering heavily discounted voice and data services to Indian consumers. In a little over a year, it has managed to acquire more than 150 million subscribers. Its launch has triggered a spate of mergers and acquisitions in the Indian telecom market. Sales and profits have crashed.
All the indications are that Airtel’s revenues will come under further pressure as RJio looks to carry its consumer mobile success into the enterprise and home segments of the market. Media reports say RJio is planning to offer MPLS, IP-VPN, cloud and managed videoconferencing services, among others.
According to its latest quarterly report, Airtel's enterprise business accounts for nearly 17% of its revenues. Its DTH business, meanwhile, had 13.9 million customers generating average revenue per subscriber of 233 Indian rupees ($3.63) per month. It has been increasingly focused on this market as its mainstream consumer business struggles.
Because Vodafone India and Idea Cellular Ltd. do not have DTH businesses, and were relatively late entrants to the enterprise sector, Airtel clearly stands to lose the most from RJio's arrival in this market.
— Gagandeep Kaur, contributing editor, special to Light Reading