India's leading mobile services provider, Bharti Airtel, has been through tumultuous times over the past 18 months. As the Indian telecom market consolidated at a feverish pace after the launch of free voice calls and rock-bottom 4G data services by Mukesh Ambani-owned Reliance Jio in September 2016, incumbents were hit badly. The result - Vodafone and Idea Cellular are merging operations, smaller operators such as Telenor and Tata Teleservices have been acquired by Airtel, and Aircel has filed for bankruptcy.
In the face of rising competition among the much fewer players, Bharti Airtel has managed to keep its head above water. In spite of a loss in the last quarter of 2017/18, it first-ever in 15 years, it has managed to make sure that its revenue market share remains stable at 32 per cent, despite Reliance Jio gaining 18 per cent of the pie in 18 months. Also, thanks to the acquisition of Telenor and Tata Teleservices, Airtel increased the wireless subscriber share from 23.58 per cent in December 2016 to 24.85 per cent, according to the latest TRAI Performance Service Indicators for 2017.
To fight the increased competition, Airtel is planning to invest Rs 25,000 crore in 2018/19 to expand and strengthen its 4G network and cater to the needs of new and existing subscribers. That will give it heft to fight Jio that has an all-4G network. Gopal Vittal, MD and CEO, India & South Asia, says: "We are obsessed with our customers and have built a strong culture of innovation and excellence. This sharp focus on the customer along with strong execution on the ground has helped us strengthen our market leadership in a highly competitive market."
The additional capex apart, Airtel, Vodafone and Idea Cellular have agreed to merge their holdings in tower company Indus Towers into the listed Bharti Infratel that is majority owned by Bharti Airtel. Indus Towers is currently jointly owned by Bharti Infratel (42 per cent), Vodafone (42 per cent), Idea Group (11.15 per cent) and Providence (4.85 per cent). The merged entity, with 1,63,000 towers, will account for 41 per cent of India's current telecom tower base.
While Bharti has managed to stave off the competition till now, the real challenge begins now. Much will depend on how the leading service provider can match the deep-pocketed Jio in pricing plans. That could well be the clincher.