Bharti Airtel is expected to report the highest revenue growth of all three Indian telecom companies when they announce their numbers for the October-December period, starting later today. This is despite the fact that Reliance Jio would have added several times more new subscribers that Airtel during the period.
Broadly, industry observers believe that Bharti Airtel’s mobile revenue will jump by a whopping 5-6% during the October-December period compared to the previous three months, even though it is likely to have added less than 1 million new users.
In comparison, Reliance Jio is expected to have added around 5-6 million new subscribers, but its mobile revenue growth is seen at just around 3%.
This disconnect is because, unlike Jio, Bharti Airtel gets its revenue growth from two sources — new users, as well as the upgrade of existing users to higher plans.
On the other hand, the prospect of existing users of Jio upgrading to higher plans is less, because they are already on various 4G plans. For comparison, nearly half of Bharti Airtel subscribers are on various non-4G plans, and millions of them upgrade from these plans to 4G devices and plans every quarter.
Therefore, even without adding millions of new users like Jio, Bharti Airtel is expected to report better growth in its revenue and profits.
Finally, the third player in the market — Vodafone Idea — is expected to report a loss of around 2 million subscribers during the last three months of 2021.
However, despite the loss of 2 million users, the company’s revenue too is expected to rise by around 3% — like in case of Jio — for reasons similar to that of Bharti Airtel: It too sees lakhs of subscribers move from 2G plans to 4G plans every month.
Meanwhile, Reliance Jio has tried to woo many existing Bharti, Idea and BSNL users to its network by launching JioPhone Next — an affordable 4G smartphone that can be purchased for a down-payment of Rs 1,999.
However, it remains to be seen just how successful the strategy has been, given that the phone comes with a contract term of 18 to 24 months, during which the subscriber has to pay upwards of Rs 300 per month.
Finally, the year-end period is also a time when people get good deals and offers on smartphones from various online retailers like Flipkart and Amazon, leading to a large number of users upgrading to the latest 4G devices in the Rs 7,000-11,000 range.
However, this time, due to semiconductor shortage, the pricing of smartphones have been on the higher side, which may have dampened this trend of upgrading from 2G to 4G.
According to market research firm IDC’s third quarter wireless device market report, the average selling price of a smartphone in India during the three months was around $196, or about Rs 14,500 − the highest in recent years. Traditionally, this has been in the Rs 12,000-13,000 range.
In fact, the $100-$200 price band would traditionally account for around 80% of all smartphones sold in India.
Because of this price increase, there was a 24% fall in the sales of smartphones priced below $200 (Rs 15,000) during the last three months of 2021 compared to the same three months of 2020 — even though 2020 was a year that was hurt by COVID.