Airtel will be in a better position to retain high-end post-paid subscriber base, DSP Merrill Lynch India said in its research report.
Reliance Jio, Airtel India and Vodafone Idea will be looking forward for grabbing post-paid subscribers – 58 million or nearly 5 percent of 1,165 million total connections – to enhance their ARPU.
Airtel is aiming to retain high-end post-paid subscriber base through its loyalty programs like #AirtelThanks by giving more value to consumers and trying to extract more ARPU out of these subs.
Airtel, according to media report, is also looking to launch Airtel Black targeting premium customers with Rs 999 per month and offering a bundle of services including lounge access, bundled apps & streaming services, international roaming & discount on consumer brands in India.
Currently most of the high-end / post-paid subs are with Airtel / Vodafone Idea and limited number is with Jio as proportion of total subs. Historically, high-end phone consumers have largely stuck with incumbents given lethargy to move, comfort on existing customer service and better roaming deals.
Reliance Jio will start targeting the enterprise segment. Competition will pick-up in the high-end post-paid cellular space as well.
Amongst incumbents, Vodafone Idea will be more vulnerable to lose revenue market share if it reduces investments in its telecom networks or exits from a few loss making circles / markets, Sachin Salgaonkar and Sukriti Bansal, research analysts at DSP Merrill Lynch India, said in their research report, said.
Airtel faces less risk of high-end consumers moving away from Airtel to Jio in the initial few years at least. This is because currently enterprise is not a price sensitive market; instead value, reliability and experience play a pivotal role.
Goldman Sachs said it expects Vodafone Idea to be free cash flow negative in the foreseeable future, with net-debt-to-EBITDA at about 11x even in FY21. This is likely to constrain the company’s ability to make network investments, and Vodafone Idea’s high-end customer base could be at risk.
The latest TRAI report said Reliance Jio has become the No 1 telecom operator in India with 31.5 percent revenue market share. Bharti Airtel has moved to No 2 position at 29.7 percent by gaining 2.5 pps qoq.
Vodafone Idea has fallen to No 3 position at 27.8 percent by losing 4.3 pps market share in India.
Jio’s market share trends to continue because Jio offers nearly 20 percent cheaper tariffs and has better coverage in terms of 4G sites.
RIL’s entry in the enterprise market in partnership with Microsoft’s Azure could disrupt this pricing and increase affordability.
SMEs could now start using enterprise services – in turn expanding the market and benefiting all companies. Cloud market size in India will be nearly $1 billion, growing at 30 percent+ CAGR for next few years.