Bharti Airtel: Post launch of much anticipated Reliance Jio services in December this year, Telecom major Bharti Airtel may reduce its data tariffs by 25% in the next fiscal year according to American multinational investment banking firm, Goldman Sachs.The report stated, “In our model for Bharti, we assume a price cut of 25 per cent in FY17E as a result of Jio’s launch. However, we assume that increased consumption will offset the impact of price cuts on revenues”.
The report also said Airtel remains well placed while having a better 2G/3G fallback, post 4G launch by Reliance Jio as it can offer 4G data services on similar spectrum as Jio.
Impact on data pricing is the one of the primary investor’s concern post launch of Reliance Jio’s data services as it has plans to take on stern competition with aggressive pricing of its data plans which may dent the bottom line of Bharti Airtel. While drastic reduction in data prices is likely to result in more data usage by the consumers, offsetting the impact of price cuts.
Airtel has an edge over other service providers as it has a much larger subscriber base which will allow it to push more network operating expenditure apart from its existing base of customers which includes fixed line and DTH subscribers.
Bharti Airtel, India’s largest telecom operator, post launch of spectrum auction by government of India in March has considerably increased its spectrum capacity. Airtel’s total spectrum rose by 31% to 947 MHz across all the circles.
The report added, “Between FY15-FY21E, we estimate the revenue market share to rise further to 31.2% (despite Reliance Jio’s launch) due to better spectrum than peers and lead in launching LTE”.