Bharti Airtel Ltd added 2.01 million subscribers in May, exactly the same number it added in April. Also, like in April, it led the industry in terms of subscriber additions. This is the third consecutive month in which the leader has had the highest number of subscriber additions. What’s interesting about the subscriber numbers for May is that Idea Cellular Ltd and Uninor Ltd seem to be getting aggressive again. In April, their subscriber addition figures stood at 1.49 million and 1.12 million, respectively. In May, their subscriber additions increased to 1.76 million and 1.52 million. According to Barclays Research, “The increase in subscriber additions for Idea and Uninor suggests a possible increase in competitive intensity in the sector. Bharti had taken the first initiative towards market share in the passive consolidation post-licence cancellations. While most companies have refrained from an all out price war and followed cues from Bharti on a tactical position in pricing, the data points to the need to focus on the RPM (revenue per minute) trends to be reported in upcoming results.”
Average tariff realization or RPM could well show a declining trend in the June quarter, at a rate higher than what most analysts have estimated. At the same time, with Bharti and Idea leading in terms of subscriber additions, the volumes are likely to surprise positively, and overall revenue may not be affected to a great extent.
It’s worthwhile noting here that in the six months, between August 2011 and February 2012, Bharti stood third on subscriber additions, behind Idea Cellular and Uninor. Its net subscriber additions averaged just 1.2 million during this period. The recent Telecom Regulatory Authority of India (Trai) report on telecom firms’ revenue for the March quarter showed that Bharti lost revenue market share for the seventh consecutive quarter. It’s quite evident now that the firm has become aggressive in the marketplace to protect and regain market share.
The company’s recent aggression has helped it regain some lost ground not only in terms of subscribers, but also with the relative performance of its stock. Since mid-April, Bharti shares have outperformed those of Idea Cellular by around 25%. Some telecom investors and analysts also prefer Bharti because it will be relatively less affected by the proposals on spectrum pricing vis-à-vis its peers.