Bharti Airtel reported yet another strong quarter of financial and operational performance as it continued to benefit from increased demand for connectivity in the wake of the COVID-19 pandemic that has constrained face-to-face meetings.
In an effort to tap demand for high-speed services, the number of cities in which the company is offering its wired broadband service has trebled to 291 by the end of March from 111 at the same time last year.
It launched this service, called Airtel Broadband, in a whopping 72 new cities during the first three months of 2021. For comparison, it had launched such services in only 8 new cities during the same three months of 2020.
The rapid expansion of footprint was also reflected in strong customer additions in the broadband business.
Total number of wired subscribers were up 27% on year at 3.07 million, compared to 2.41 million as of March 2020.
Airtel added 2.74 lakh new wired broadband subscribers in the first three months of this year, which translates to about 91,333 new wired subscribers being added every month.
During the same period last year, it was adding only 21,000 new wired, residential subscribers per month.
While this growth is still only about half that of Reliance Jio, which is adding around 1.9 lakh new subscribers per month, it indicates the potential of Bharti Airtel’s new strategy of partnering with local cable operators.
“The company’s focus on re-calibrated offerings and launch of Xstream bundles, with content and unlimited internet, to accelerate penetration has resulted in highest ever net addition of around 274K to reach to a total base of 3.07 Mn. The company has also been rapidly expanding its reach to non-wired cities via an innovative LCO partnership model, which is now live in more than 200 cities,” the company said in its comments on the performance for the quarter.
ARPU HIT
Despite such strong increments on the customer side, the company has been seeing an erosion in the average amount realized from each customer due to price competition unleashed by Jio.
Airtel had been forced to cut its prices for wired broadband plans after Jio introduced new unlimited plans starting at just Rs 399 per month in September last year.
As a result, the average monthly bill paid by a residential wired subscriber fell by Rs 119 to Rs 684 per month compared to last year.
Because of this hit, the full impact of the 27% jump in subscriber numbers was not reflected in the company’s revenue from its residential broadband business. Therefore, revenue from the wired broadband business increased only 5% on year to Rs 601 cr from Rs 573 cr last year.
On the other hand, the company is investing far more in the wired business compared to earlier. The money invested by the company in this business jumped from Rs 97 cr in Jan-Mar last year to Rs 333 cr during the same period this year.
As a result, the (residential) wired business accounted for 6% of the total capital expenditure incurred by the India unit of the company, even though it generated only 3% of the India revenue.
The bulk of the revenue continued to come from the wireless business, which contributed around 75% of the company’s top line while accounting for only 71% of the total capital expenditure.
The mobile business continued to become more and more profitable as the average amount spent an Airtel mobile subscriber per month increased to Rs 145 this year from Rs 135 last year.
Underlying this growth was the increasing take-up of 4G services. Total number of 4G data users jumped 32% on year and 8% on quarter to 179.3 million, which accounts for around 58.7% of the total mobile subscriber base, up from 52.4% last year.
Not surprisingly, the total wireless data carried on the network jumped 43% on year to almost 9 billion GBs. This is now more than half the wireless data traffic carried by market leader Reliance Jio.
The faster growth in consumption compared to users was reflected in the higher per-capita usage of data. Average data consumption touched 16,840 MBs per customer per month, up from 16,766 for the Oct-Dec period and 14,972 for the year-ago period.
Airtel is, by far, the market leader on this metric, with Jio reporting an average consumption of around 11 GB/month.
However, along with the spread of high-speed wired internet services, Bharti Airtel seems to be witnessing a dip in the prospects of its direct to home satellite broadcasting service known as Airtel Digital.
The service saw a decline of 1.56 lakh users during the first three months of the year, compared to an addition of 4.85 lakh for the preceding three months.