Post-paid subscribers are important because they bring nearly 20 per cent of telco revenues. Thirdly, Airtel
had decided to take a measured approach in expanding its fibre-to-home broadband (FTTH) business as well as stick to a “partnership” model for content to power over-the-top (OTT) services, rather than take the aggressive stance of Jio
in both these fronts.
It is also concentrating on a niche market for its payments bank business, which has 30 million customers and does a throughput of Rs 70 billion per month, focusing on rural and smaller towns, cashing in on its distribution strengths, offering cash services and catering to the needs of migrant labour in cities.
And fourthly, Airtel
has decided to prune its bulging subscriber base at the bottom of the pyramid by increasing the minimum tariff for a recharge to Rs 35 month. It has more than 100 million customers who do a recharge of less than Rs 10 a month. Airtel executives say this would reduce their customer base but would improve its revenues and reduce costs.
In order to get a larger share of net 4G smartphone subscriber additions, Airtel is re-farming its spectrum in 900 MHz in 10 circles from 2G to 4G spectrum, which will improve indoor data usage
and VOLTE voice. In the remaining circles, it will either liberalise the administered spectrum (five circles) or go for auction again (seven circles) when they are announced.
They are not interested in bidding for 5G spectrum. It is also re-farming 2100 Mhz spectrum also to 4G. Airtel has been doubling its fiberised towers over the last two years, which has made it possible for it to offer 1 gbps speeds in all cities and in 100,000 rural locations, and it will be completed by March next year.
Sources in the company say unlike Jio’s aggressive stance of targeting 50 million homes with FTTH services, Airtel is of the view that the market is much smaller. Airtel insiders say Indian homes spend about 1.5 per cent of their earnings on telecom and broadband services, and therefore potential homes must have a yearly income of Rs 1.5 million to afford such services.
“The number of households with this income is 30 million and 18 million homes have fixed broadband. So the market is not as big,” says an insider. That is why Airtel will expand its fibre-to-home network to cover 2-3 million homes every year. Of those only a small percentage will convert to Airtel. “We think this pace is more than enough because we have DTH subscribers also. When there is a major disruption in the market, we will take a call,” the source said.
In the content space too, Airtel sources say the approach will be of “partnerships” rather than taking stakes in content companies
and broadcasting players. He points out this model has worked.
For instance, Netflix
has added 300,000 customers through its exclusive tie-up with Airtel while Amazon Prime
has added 1 million customers to its fold through the Airtel alliance.
Airtel executives point out the average revenue per user has now bottomed out and is expected to go up with increase in data usage.
Wrest the top spot in terms of net 4G customer additions per month from Jio
Gain largest share of post-paid customers (who contribute about 20% to telcos’ revenue), pushing Vodafone Idea behind
Reduce subscriber base at the bottom by increasing minimum recharge tariffs
Grow cautiously in FTTH market
Use partnership route to develop content for OTT rather than through acquisitions
Increase non-telecom revenues