Bharti Airtel Sees ARPU At Rs 200 In A Few Months, Says Goldman Sachs Report
Bharti Airtel Ltd. is of the view that average revenue per users would have touched Rs 200 already had the pandemic not happened and believes that the company should get there in the next few months, according to a latest Goldman Sachs report.
In a recent note, Goldman Sachs said it had hosted Bharti Enterprises Chairman Sunil Bharti Mittal at its CIO Tour on Dec. 11, where he shared thoughts on various aspects of the telecom business, including his outlook on industry structure and tariffs, 5G, smartphones and devices, among others.
It further said as per Bharti, the ideal ARPU for the industry is Rs 300, but that it could be a longer journey to get there.
"ARPUs at Rs 300 does not mean there will not be offerings for consumers at Rs 100 price points, and the company believes high-end customers should be able to pay $6-8 per month," it said.
Bharti mentioned that it will not raise tariffs at the cost of market share, Goldman Sachs report stated.
According to the report, Bharti Airtel believes the current industry structure (4 players) is ideal, but expects market share to consolidate further.
"..it believes the top two operators can end up with around 80% market share (currently around 75%) in 12-18 months," the note said.
Bharti does not expect a material market share difference between the top two players, the report said adding that the company's focus is on higher-quality customers, and it has consistently been able to attract and retain mid-to-high end users.
On 5G, the report said Bharti Airtel said if spectrum prices were to remain at current levels "they may not participate in auctions in 2021".
"However, by 2022, Bharti may need to buy 5G spectrum - the company expects 5G launch, at least in India's main cities, to start happening in 2-3 years. Per Bharti, there are currently not enough use cases for 5G and devices will need to be more widely available at lower price points for 5G to happen," it said.
The company does not think 5G will lead to incremental capex as it would just be substituted by a reduction in 4G capex, the report added.
Bharti Airtel's execution continues to be ‘near-flawless’, Goldman Sachs said adding that it has been encouraged by the closing of the incremental market share gap between Bharti and Reliance Jio Infocomm Ltd..
"While a tariff hike is inevitable in the near term in our view, given Vodafone Idea's stretched balancesheet, we see Bharti continuing to win market share in the interim; the company's current 32% market share can potentially rise to mid-to-high 30% in the foreseeable future if tariffs do not move up rapidly," the report said.