Following up on our post about the Alien Invasion failure by Vodafone (click here), we are following up with what happened in Q1 - 2022.
Bharti Airtel (where EkaLore previously wrote about receiving an investment of USD$1B from Google/Alphabet in January 2022) has good financial results from the calendar 2022Q1. Bharti Airtel’s cellular subscriber base increased to over 201M 4G (of 326M). Results, using Average Revenue Per User (ARPU) as a metric, of 178 rupees(increase 22%+ from 145 rupees 2021Q1). This resulted in a revenue increase of 22%+ to USD$4.06B (315B rupees) and 174%+ increase from USD$98M net income to USD$259M (20.08B rupees) . Bharti Airtel’s management has signaled further price increases to bring ARPU to 200 rupees (eventually 300) which will likely result in even better net income figures later in 2022.
Google/Alphabet’s investment quality improves as Bharti Airtel’s customer base expands as their fixed costs of investment apply to an ever larger pool of customers. Continued ‘SIM Consolidation’ (an Indian market phenomenon in only a few global cellular markets) may even reduce the total count of cellular internet users even further (only added 500K to 1.14 2B in 2022Q1). Competitive positioning is critical to continue competing for investment funding and improved market share.
ARPU increased only 7.5% at Vodafone IDEA from 115 rupees to 124 rupees for the same period. Vodafone IDEA subscribers churned downwards 6.4M users (February-March) to 243.8M of which 118.1M (up 1M) were 4G . APRU was up 10.6% to 167.6 rupees from 151.6 prior at Reliance JIO, adding 1.26M subscribers in March 2022 to 410.2M, after SIM consolidation losses of 10.9M in the previous 3 months.
Development of the India cellular internet services market is continuing as ‘feature-phone’ sales drastically decline in the face of supply-chain problems and increased smart-phone sales providing consumers with better perceived value-for-money. As inflation and carriers’ price increases erode 2G/3G/4G perceived values the conversion of consumers to smart-phones (now only 55-60%) will improve perceived value for money. Applications (apps) will take on a greater role and data produced from apps’ usage and network-effects will increase value for users and app’ coders. This shift is critical to increasing ARPU in the customer base. Airtel’s data use rose 14.2% (28.7% YoY) to 19.2GB per month compared to Vodafone IDEA usage at 14.19GB and Reliance JIO at 19.7GB The structural changes in the India cellular industry also bodes to improve productivity as consumers and businesses shop for better buys in an inflationary economic climate.
On the infrastructure side steps to scale up and increase margins across the customer base have resulted in a storage capacity of >100PB (100 million billions!) delivering 2T events per day including 36.7M Payments Bank monthly active, of 129M, financial users. As broadband and data center infrastructure rollouts continue these leverage to increase availability of cellular services where 237,500 tower locations across 795,000 jurisdictions are already in operation. Vodafone IDEA has said that increased coverage (service areas) are their most critical priority as their funding issues continue. Infrastructure geographic coverage and data centers are critical to competitiveness at scale.
Steps to mitigate exposure to increased energy costs (reducing diesel, increasing renewable energy, better energy management) also protect against inflationary oil price shocks. Increased asset spending for infrastructure is assumed as competition to deploy 5G, increase data center capacity, and widen geographic footprint continues. Infrastructure spending for scale is critical to increase revenue and margins.
Bharti’s initiatives in multiple technology marketspaces bears watching for improvements in revenues and profits. Although they've bested Vodafone and "Alien Invader", Bharti is still getting support from another Alien Invader, Alphabet (Google).
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