Mittal shared thoughts on various aspects of the telecom business, including its outlook on the structure and tariffs of the industry, 5G, smartphones / devices, among others.
According to Goldman Sachs, Mittal noted that although Jio has received investments from several players, this puts Airtel at a disadvantage.
Bharti Airtel will be looking to upgrade its payment bank license at Small Finance Bank – this could allow for loans and increase the size of deposits (which are currently limited to $ 1,500).
Mittal informed Golman Sachs that Airtel is seeing a lot of traction for its payment bank; the company has one of the largest branch networks in India, with billions of dollars in monthly production. “Bharti has managed to reduce the consumption of mobile customers thanks to this offer.”
The Telco led by Sunil Mittal looks at low-end smartphones, but primarily in the form of partnerships and grouped data. Mittal told Goldman Sachs that the company has stayed away from subsidies for devices in the past and will continue to do so because it believes it is a loss of cost.
High customer discounts and low loyalty do not justify investing in devices,
especially since ARPUs are very low in India. Bharti Airtel will not enter the production of devices or equipment.
“… as we have pointed out in the past, we do not consider the launch of smartphones or 5G services by Jio as a negative for Bharti; Our analysis suggests a minimal impact due to the launch of the subsidized devices and we believe that the 5G device ecosystem will take several years to mature in India. We remain constructive on Bharti and see current levels as a compelling buying opportunity, ”Goldman Sachs said in a statement.
Bharti Airtel believes that the ARPUs would have already reached Rs200 if COVID had not happened and considers that the company should get there in the next few months.
According to Mittal, the ideal ARPU for the industry is Rs300, but he mentioned that it could be a longer journey to get there. ARPU at Rs300 does not mean that there will be no offers for consumers at prices of Rs100, and the company believes that high-end customers should be able to pay 6-8 USD per month.
Mittal said Airtel will not increase tariffs at market share.
Bharti Airtel considers that the current structure of the industry (4 players) is ideal, but expects the market share to be further strengthened; considers that the first two operators can reach a market share of around 80% (currently around 75%) in 12-18 months.
“The execution of Bharti Airtel continues to be almost impeccable and we were encouraged by the closing of the incremental market share gap between Bharti and Jio. Although an increase in tariffs is inevitable in the short term in our opinion, given the extensive balance sheet of Vodafone Idea, we see that Bharti continues to gain market share in the meantime; the company’s current market share of c.32% could potentially increase to 30% on average in the foreseeable future if tariffs do not increase rapidly, ”Goldman Sachs said in a note.
Mittal does not expect a material difference in market share between the first two players. The company focuses on high quality customers and has consistently managed to attract and retain end customers from medium to high.
Telco also believes that if spectrum prices remain at current levels, it may not be bidding in 2021.
However, by 2022, Bharti Airtel may need to buy 5G spectrum and is expected to launch 5G in 2-3 years, at least in major cities in India.
Mittal said there are currently not enough use cases for 5G and the devices will have to be widely available at lower prices for 5G to happen. The company does not believe that 5G will lead to incremental capex, as it will only be replaced by a reduction of 4G capex.