Airtel 4G to go pan-India this year, won't follow Jio strategy
27 July 2017
Indian telecom market leader Bharti Airtel plans to roll out its VoLTE service, enabling phone calls using 4G technology, across India by end of the current financial year, the company announced on Tuesday.
"We have done (VoLTE) trials in 5-6 cities. Towards the end of this fiscal year, we will be taking VoLTE everywhere. The uptake of VoLTE devices will depend on certification ... we should be very much national in the coming 6-9 months," Gopal Vittal, Airtel's managing director and chief executive (India and South Asia), said during an earnings call.
At present, Mukesh Ambani's Reliance Jio is the only operator in India offering voice on 4G network using VoLTE technology, while the incumbent telcos have been offering voice calls to their 4G customers with support of their other established networks - 2G and 3G.
Vittal said that 3G networks in India will be phased out faster than in other parts of the world and "India will get to a situation where 4G and 2G will co-exist for a while".
Bharti Airtel reported its smallest profit in 18 quarters as the price war triggered by newcomer Reliance Jio led to a massive 75 per cent fall in its April-June earnings.
The net profit for the first quarter of 2017-18, at Rs367 crore, was 74.9 per cent lower than the year-ago period, and the company blamed the disruptive pricing of the new entrant for continued "turbulence" and stress in the market.
Net income for the Sunil Bharti Mittal company stood at Rs1,462 crore in the first quarter of 2016-17.
To questions on Airtel's strategy to counter the new 4G feature phone announced by Jio, Vittal said Airtel will not be taking a similar route.
"One of the things that we have stayed away and have no intention to get into is subsidising device, managing device inventories and running these devices," he said.
Reliance Jio has announced that it will launch a 4G feature phone against one-time refundable deposit of Rs1,500 a unit. It will come pre-loaded with applications with the option of unlimited data usage and free calling service starting at Rs24 (See: Jio launches 'effectively free' 4G phone; data starts at Rs24).
Vittal said that Jio's feature phone will open up a new segment for 4G services.
"We believe that this could propel the launch of cheaper phones in the market and that is something that we embrace. We will work with all the device companies to encourage this. We will continue to look at opportunity where we can bundle," he said while saying there was uncertainty over the pick-up of the JioPhone.
Vittal said that the price of the feature phone is on the higher side compared to what is being sold in the market.
"Some 60-65 per cent feature phones are sold below Rs1,000 in India. This is the higher end of that. We need to understand what the terms and conditions are and how customers respond. We will respond at the right point of time," he said.
Vittal said that aggressive plans of Jio may lead to further consolidation which will benefit Airtel. He said that company will respond with competitive strategy to increase its market share.
"You have seen action in the market already. We have lost ARPU over last few quarters, we have seen revenue erosion. This is simply because we have responded in the marketplace with aggressive pricing in order to compete and grow our market share. That aspect will continue," Vittal said.
The total customer base of Airtel in India increased by 9.7 per cent to over 28 crore but its average revenue per user (ARPU) declined by 21.1 per cent to Rs154 from Rs196 on a year-on-year basis.
"The reason that is important is as you come out of this war that is currently on, we believe that this market will consolidate behind three players plus the government player, may be four, but perhaps three. We believe our objective is to consolidate and grow our market share," Vittal said.