Mittal had shared thoughts on various aspects of the telecommunications business, including its outlook on industry structure and tariffs, 5G, smartphones / devices and others.
According to Goldman Sachs, Mittal mentioned that while Jio has received investments from a number of players, it puts Airtel at a disadvantage.
Bharti Airtel will try to upgrade its Payment Bank license to Small Finance Bank – this could enable lending and increase deposit size (which is currently capped at $ 1,500).
Mittal informed Golman Sachs that Airtel had a lot of pulling power for its payment bank. The company has one of the largest branch networks in India with a monthly throughput of billions of dollars. “With this offer, Bharti has been able to reduce the churn of its mobile phone customers.”
The telecommunications company led by Sunil Mittal deals with low-end smartphones, but above all in the form of partnerships and bundled data. Mittal told Goldman Sachs that the company has historically stayed away from device subsidies and will continue to do so because it sees it as a cost burden.
High customer churn and low loyalty don’t justify investing in equipment.
especially since the ARPUs in India are very low. Bharti Airtel will not penetrate into device or device manufacturing.
“… as we have pointed out in the past, we do not see the introduction of smartphones or 5G services by Jio as negative for Bharti. Our analysis suggests minimal impact from the introduction of subsidized equipment. We believe that it will take the 5G device ecosystem in India a few years to mature. We remain constructive on Bharti and see current levels as a compelling buying opportunity, ”Goldman Sachs said on the note.
Bharti Airtel believes ARPUs would have reached 200 rupees by now had it not happened and believes the company should get there in the next few months.
According to Mittal, the ideal ARPU for the industry is Rs300, but it could be a longer trip to get there. ARPUs at Rs.300 don’t mean there aren’t any rupee 100 consumer deals, and the company believes that high-end customers should be able to pay $ 6 to $ 8 a month.
Mittal said Airtel will not increase tariffs at the expense of market share.
Bharti Airtel believes that the current industry structure (4 players) is ideal but expects further consolidation of market share. It is assumed that the two largest operators can achieve a market share of around 80% (currently around 75%) in 12 to 18 months.
“Bharti Airtel’s execution continues to be virtually flawless and we have been encouraged by the closing of the incremental market share gap between Bharti and Jio. Although, from our point of view, a tariff increase is inevitable in the short term, in view of the tense balance of Vodafone Idea we see that Bharti continues to gain market share in the meantime. The company’s current market share of approximately 32% could potentially rise to a mid to high 30% in the foreseeable future if tariffs do not rise rapidly, ”Goldman Sachs said in the press release.
Mittal does not expect any significant difference in market share between the two top players. The company focuses on customers with higher quality and has consistently won and retained medium to high end customers.
The telecommunications company also believes that it may not participate in auctions in 2021 if frequency prices remain at current levels.
Bharti Airtel may have to buy 5G frequencies by 2022 and expects the launch of 5G to begin in at least the main cities of India in 2-3 years.
Mittal said there aren’t enough use cases for 5G right now and that lower-priced devices need to be more available for 5G to work. The company does not anticipate that 5G will lead to additional investment as it will merely be replaced by a reduction in 4G investments.