Performance summary

The revenue for Bharti Airtel touched USD 3.6 billion in 4Q20, showcasing a growth of 24% compared to 4Q19. This growth was attributed to a significant increase in the average revenue per user (ARPU) and a strong growth in net additions to the customer base. During the 4Q20 quarter, the company reported a net profit of USD 117 million, which rode primarily on the back of an exceptional one-time gain earned through the merger of Bharti Infratel with Indus Towers Ltd.

Figure 1 : segment wise revenue split, 4Q20 vs 4Q19

Key highlights for the quarter

Customer acquisitions showed continuous improvement for Bharti at the expense of Vodafone Idea

Mobile segment

The mobile customer base for Bharti increased to 307 million customers at the end of 4Q20. The quarter noted strong net additions of 14.2 million customers compared to a mere 3 million customers back in 4Q19.

• Airtel intends to refarm its existing mid-band spectrum for rolling out 5G services in the mid-to-long term future. Earlier in January, Bharti demonstrated 5G via a non-standalone technology in the 1800 MHz band.

The operator’s current 2G spectrum of 900 MHz band has already been repurposed for its 4G services.

Fixed segment

Fixed-line and broadband service operators have gained a substantial customer base through their partnerships with local cable operators. The customer base has shown a healthy 9% YoY growth, driven by an increase in the number of people working remotely, as well as by the fact that homes are now the centre of all online activities due to the pandemic situation. Bharti Airtel added 215,000 fixed broadband customers, taking the total fixed services customer base to 2.79 million at the quarter’s end.

The Airtel Xstream platform bundle helped the company gain fixed broadband subscribers as it offered a complimentary Android TV box, access to OTT content through the Airtel Xtreme app, and connectivity services.

• Airtel aims to upgrade all of its copper infrastructure to fibre by the end of 2021. Bharti has the same timeline in mind to shift a massive base of its fixed broadband customers to fiber-to-the-x (FTTx) tech and sunset legacy DSL-based broadband services.

The home segment customer base is on the company’s focus as they increase the effort taken to expand on their digital presence in cities that lack fixed broadband infrastructure.

• The local cable operator (LCO) partnership model is one such example, where services related to billing, planning, and customer relationships are handled by the telco while the LCO lays and maintains the last mile fibre. Bharti has this model in place at over 120 cities and plans to expand its reach to 1000 cities.

Digital TV

As Bharti continues to consolidate its position in the DTH business, its figures have also improved by fourfold in its customer base at 4Q20 compared to 4Q19. The customer base of Pay-TV, an Airtel arm has likewise driven up to 17.87 million consumers as of year-end 2020.

• The growth enabler for Pay-TV was its multiple partnerships with the EduTech space. One such example was when Airtel collaborated with Akash Institute and Vedantu to launch EduTech channels for students with limited or no access to broadband and internet services.

Focus on accelerating growth in B2B segment remained priority

A strong 9.2% YoY growth in the enterprise segment was driven by a heightened demand for managed hosting and unified collaboration and communication services.

• Airtel launched Airtel IQ, a cloud-based communications and collaborations services suite to grow revenues in this particular segment.

Leading companies such as Swiggy, Justdial, UrbanClap, and Rapido have signed onto the Airtel IQ platform, taking the total count to over 45 large customers.

Efforts on retaining data customers bring forth an improved ARPU for Bharti

Airtel continues to lead the industry’s ARPU for the mobile services segment. For 4Q20, Airtel reported an ARPU of Rs.166 (USD 2.2) compared to Rs 135 (USD 1.9) for 4Q19. The increase was caused by a growth in average data usage and calling minutes. Mobile data traffic saw a healthy YoY growth of 52.4% during the quarter as well.

However, the ARPU for digital services and home services stood lower compared to 4Q19. Competition in the fixed broadband segment has improved following the entry of Reliance Jio. Despite favoured growth in net customer additions, revenue generated for Bharti from these segments remain almost flat-lined.

Twimbit’s Outlook

• Airtel’s bid to ramp up its enterprise business in both large and small enterprise segments will help the telco in keeping its foothold strong in the growing Indian ICT market. To ensure its success, Airtel has executed multiple collaborations and partnerships in the past year to offer cloud, collaboration, and security services to its small, medium and large enterprise customers.
• A weakened Vodafone Idea means Bharti will continue to grow in its share at the consumer market as well. Bharti is now offering converged services – including fixed broadband, mobile, and entertainment. This could help the telco penetrate deeper into the high-end customer segments.
• The ability of Bharti to raise funds from external sources as well as its overall liquidity position would be sufficient to pay its annual gross revenue (AGR) dues. While the company is consciously spending on spectrum, it is also taking steps to improve its 5G play. Airtel has successfully demonstrated its 5G test network. Coupled with its collaborations for 5G equipment and technology vendors, Airtel has testified its readiness to launch 5G and maintain a stronghold on the Indian market.