Bharti Airtel came out with
satisfactory Q1 FY17 result with growth in all segments. Bharti achieved
improved from EBITA level and also managed to reduce their debt level while
generating healthy cash flow generation. Most of the analyst was concerned
about the fall in voice usages as well as impact on data usage path. On a
contrary, the result indicated that Data User base increase marginally whereas
the Data APRU is in and around $2.9; same as last quarter.
The concern area is
exponential growth in their data consumption which is stagnated around 1GB per
active user. With around 59 Mn Data users, Bharti Airtel is again Number one in the segment. The per user data consumption clearly indicate that Indian user
appetite level and it may increase to 2 GB down the line once the price
deduction implemented by Bharti Airtel. The recent interview by Bharti Airtel CEO Mr. Gopal Vittal that device price point acts showstopper but we all need
to understand that we should not go by the number of mobile connection but
should focus on literacy rate of India. As of today, India is having around 310
Mn data user and at max it can go to 450 even if device price go down to 1000
INR.
According to one article published in Moneycontrol.com that around 133.3
Mn citizen income is less than 5000 INR per month and in that scenario, we must
discard those userbase as potential data user. At the same Mobile penetration
in rural sector is around 41% and that comes around 500 Mn wherein those user
are only interested to receive call and generally uses missed call to inform
the other side to call them back. Even though you capture15% of such user then
out of 633 Mn TAM, the SAM will be around 100 Mn and there any operator will
face the issue of payment recovery. The cost of laying down the network vs.
cost recovered is near to zero and we should learn from BSNL situation. Based
on the above calculation we are left with 700 Mn connection available in Rural
and sub rural segment and dominant connection comes from Metro. The Tele-density
of Urban area is around 150% and that reduce the TAM of 700 Mn to 500 Mn. Basis
the calculation we have TAM of 600 Mn and we already captured 50% of the same
as active userbase. If we deduct 70Mn -80Mn userbase who is using double
connection then we are left with 520 Mn user base which left us with around 210
Mn additional user to be grabbed.
The analysis clearly indicates that we all are over
optimistic about the growth of data user and data usage in India. We should
also be very cautious about the potential of growing APRU and it will only go
down the line post Reliance Jio launch. Bharti Airtel cleverly placed its
alternative data product in the market place which in-turn started generating
revenue and will continue to grow but other service providers needs to give
serious thought about the path to 4G. It will be interesting how Reliance jio
will play out in terms of pricing and positioning of their services through
subsidy and how far they can sustain subsidy
