Airtel’s new challenges under India CEO Gopal Vittal

Telecom Lead Asia: Bharti Airtel will face fresh challenges under Gopal Vittal, the newly appointed CEO of its mobile business in India.

Besides improving profitability, the important hurdle will be to increase both 3G and 4G subscriber base. Growing 3G user base from the 5 million mark and data ARPU will be the immediate task for Gopal Vittal.

Recently, Bharti Airtel added around 3,180 TD-LTE subscribers through its 4G network in Kolkata and Bangalore. Airtel claims that it achieved LTE ARPU of more than 20 dollars.

Airtel’s declining ARPU is a major concern. ARPU decreased to Rs 177 in Q2 2012-13 from Rs 185 in Q1. Its rival Reliance Communications’ ARPU increased to Rs 102 from Rs 98 during the same period.

For Gopal, the task will be easy as he spent one year across Singtel Group in South Asia/Australia, Softbank and Silicon Valley understanding emerging trends in data and internet space.

Airtel India during Sanjay Kapoor’s tenure, generated evenue of more than Rs 500 crore per quarter from mobile data. Driven by 77 percent increase in mobile data income, Airtel clocked 17.4 percent increase in second quarter revenue to Rs 20,273 crore

As the CEO – India, Gopal will define and deliver the business strategy and provide leadership for Airtel’s India operations.

Mobile voice revenues in India were depressed due to the seasonal effect in Q2. Analysts feel that India will become a strong data market after 2-3 years. Voice will continue to dominate revenue streams in India.

Key focus areas for Gopal would be enhancing market share and margins along with growth of alternate revenue streams including 3G, Data, Airtel Money and Value Added Services. Airtel’s EBITDA decreased to 31.3 percent in Q2 2012-13 from Q1’s 30.2 percent. In fiscal 2010, Airtel’s EBITDA was 40.1 percent.

READ HERE: Airtel India CEO Sanjay Kapoor to step down

In addition, Gopal will lead Airtel India towards strengthening its position as a benchmark in innovative practices, brand leadership, operational efficiency, customer experience and talent/leadership depth.

Bharti Airtel’s net profit margin decreased to 3.6 percent in the second quarter of fiscal 2013 from 3.9 percent in first quarter and 21.4 in fiscal 2010.

Its GSM rival, Vodafone India reported 3.7 percent decrease in revenue to £2.038 billion for the six months ended 30 September 2012. In H1 of 2011, revenue of Vodafone India was £2.117 billion.

India’s largest telecom operator’s net profit margin was 6 percent in 2011-12 and 21.4 percent in fiscal 2009-10.

Airtel’s rival Reliance Communications’ net profit margin decreased to 2 percent in second quarter of fiscal 2013 from 3.1 percent in the first quarter.

Gopal Vittal will report to Sunil Bharti Mittal, chairman & managing director, Airtel. At this point of time, Airtel is silent about Manoj Kohli’s role as the CEO of both India and African mobile operations.

READ MORE: Airtel needs new strategies to connect

South Asia operations i.e. Bangladesh and Sri Lanka would report into the CEO (International) effective 1st March 2013.

READ MORE: Bharti Airtel is facing significant senior level exodus in 2012-13.

READ MORE: In December 2011, Bharti Airtel has achieved more than 50 million customers in Africa, where it acquired mobile operations in 15 countries in a $10.7 billion deal in June 2010.

Krishna Arvind
[email protected]