Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2017 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.

Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
Bharti Airtel: Nervousness all around - Views on News from Equitymaster
  • E-MAIL
  • A  A  A
  • Dec 4, 2009

    Bharti Airtel: Nervousness all around

    Uninor is the latest telecom operator to launch services in the already overcrowded Indian telecom market. As such, competition has just gotten more intense. Uninor is a service launched by Unitech Wireless. The latter is a company floated by realty major, Unitech. Norway's Telenor, the world's sixth largest mobile operator holds nearly 67% in Unitech Wireless.

    Now, with it being the latest telecom service provider, it had to come out with a competitive plan to intrigue potential customers. It must be noted that India currently has amongst the world's lowest telecom tariffs ranging from about 0.5 to 1 paisa for a per second tariff plan and a Rs 0.5 per minute for a per minute pulse plan.

    Uninor has now taken competition to the next level. It has launched a plan wherein customers will be charged Rs 0.29 per minute for local calls. STD rates on the other hand will be Rs 0.49 per minute. However, it has not launched any per second tariff as against to what the latest fad is in the telecom industry.

    Telecom tariffs have been following the laws of gravity in recent times. One can never know what would be the next best rate. Or in other words, to what extent the telecom operators would be ready to grab a share of the world's fastest growing telecom market. And with a few telecom companies still looking to launch services in India, one can only wonder what's next. However, the reason telcos are going all out is quite clear. It is the huge opportunity. With the tele density level still at a low 50%, the opportunities are abundant.

    In terms of market shares, it seems that the larger and established players are facing some difficult times. They are of the belief that the current tariff rates are so low that it makes businesses unviable. On the other hand, the newer players beg to differ. Let us take Uninor for instance. Its management believes that after working out all the calculations, the company is looking at achieving an EBITDA break-even in three years and possibly also a the positive operating cash flow within five years of launch.

    A leading business daily has indicated that India's largest telecom operator Bharti Airtel has expressed its concerns over the falling tariffs. The company has supposedly approached TRAI, asking it to look into the business models of some its peer group companies. The business daily has rightly termed this move as a "rare display of nervousness" by the company. Terming it as 'predatory pricing', Bharti's management believes that the current tariff structure is lower than the cost structure of operators.

    The fact that the fundamentals and the dynamics of the industry are changing is well known. Key parameters such as ARPUs, ARPMs and MOUs have been on steady decline. While these concerns are true for the whole industry, the situation of established players is no different.

    However, it seems as if Bharti is feeling the heat the most. Being the driving force behind the telecom revolution in India and also the fact that it is currently the market leader and the most experienced player in the industry, one cannot blame the management for feeling this way. As compared to the 'good times' which it saw over the past few years, and also the fact that it took so long to reach its current stature, such issues will definitely be looming on the minds of its management.

    Source: Company, COAI, Equitymaster research; * GSM subscribers only

    Apart from concerns over operating the business, the company also must be nervous about the incremental subscriber additions. Bharti is still way ahead of competition in terms of subscriber base. However, on the back of increasing competition, its monthly additions have been seeing some pressure. It is not that the company has not been adding new subscribers. But the number of subscriber additions has reduced over the past few months.

    During the period between January and August 2009, the company added nearly 2.8 m subscribers every month. This figure has come down to 2.5 and 2.7 m in the September and October respectively. As such, its share in the total subscriber additions has been falling since January this year. During CY08, the company had a share of nearly 36% in the total subscriber additions. For the month of December 2008, the share stood at about 32%. This has fallen to 26% during October 2009.



    Equitymaster requests your view! Post a comment on "Bharti Airtel: Nervousness all around". Click here!

    11 Responses to "Bharti Airtel: Nervousness all around"


    Dec 17, 2009

    I am a prepaid customer of AirTel for last two years.
    For the first year the network signal was the best among all the players in my locality (Chiplun, Ratnagiri)but suddenly from second year the network got worsened and its very difficult to get network in the house.Airtel should think over its network system.



    Dec 15, 2009

    I have been an Airtel user for the past 5 years.I find it the best service provider among all its peers, as i have used other services too.
    And being a financial analyst too I think this is the best time to accumulate Bharti.Please check the Sensex P/E Vs Bharti P/E...You will get your answer....



    Dec 14, 2009

    i am a postpaid & prepaid customer for past 3-years,i have lost lot of money due to their systematic faulty billing methods,its one of the the worst telecom operator in india thriving with support of black-money,benami,evil politicians,waiting for MNP-mobile-number-portability to throw it.



    Dec 13, 2009

    To all the investors of stck exchange i would recommend to accumulate bharti airtel at dips.


    Prasad V

    Dec 11, 2009

    Vodofone, leveraging its financial muscle, is giving stiff completition to Aritel in most of the circles. Infact, the customer service of Vodafone and delivering to committed features of the contract (especially corporate customers) are observed to be far superior to Airtel services.

    Airtel seems to be biting far higher than what it can service, both network capacity and customer support, etc.

    We should welcome all new competition, which at some point in time may get consolidated into few big players, but will certainly benefit the customer.



    Dec 11, 2009

    Airtel service in Bangalore has gone from bad to worse and so has its roaming connectivity, you just dont get a signal and lodging a complain does not help either.
    If you threaten to switch they are more then happy to accomodate you as Airtel is over subscribed.


    Ishteyaque Ahmad

    Dec 10, 2009

    i am subscriber of Airtel which gives very good service and cheap rete, we receive good signals where ever we go, i recommend to buy more!


    Gururajan M

    Dec 8, 2009

    Bharti will definitely be a performer with its largest subscriber base but not a star performer as in yester years.


    Shantanu Sarkar

    Dec 7, 2009

    Here's the catch. The company which would be less customer friendly in rates would be more profitable for investors. So, if you don't like the company as a mobile customer, may the company is making money so grab its shares. On the other hand, if the rates for the customers are low and gives lots of freebies like Tata Indicom, then it is not good for investors. However, saying all this, quality of service is always a key differentiator in long term for investors as well.



    Dec 7, 2009

    i am a post paid and prepaid user of AIRTEL since alast 5 years ITS ONE OF COSTILEST in market witch FOOLS public so i have SOLD ALL BHARTI shares and shifted to RELIANCE which has been alwys custmer friendly and innovative SELL SELL SELL BHARTI

    Equitymaster requests your view! Post a comment on "Bharti Airtel: Nervousness all around". Click here!

    More Views on News

    Bharti Airtel: A Good Quarterly Performance (Quarterly Results Update - Detailed)

    May 6, 2016

    Bharti Airtel has reported a8.4% YoY growth in the topline and an increase of 2.8% YoY in the bottomline for the quarter ended March 2016.

    Bharti Airtel: Revenues Rise Profits Fall (Quarterly Results Update - Detailed)

    Feb 4, 2016

    Bharti Airtel has reported a 3.8% YoY growth in the topline and a decrease of 22.2% YoY in the bottomline for the quarter ended December 2015.

    Bharti Airtel: A stable performance (Quarterly Results Update - Detailed)

    Nov 23, 2015

    Bharti Airtel has reported a 4.3% YoY growth in the topline and an increase of 10.1% YoY in the bottomline for the quarter ended September 2015.

    More Views on News

    Most Popular

    This Small Cap Can Drive Chinese Players Out of India (and Make a Fortune in the Process)(The 5 Minute Wrapup)

    Aug 17, 2017

    A small-cap Indian company with high-return potential and blue-chip-like stability is set to supplant the Chinese players in this niche segment.

    The Most Important Innovation in Finance Since Gold Coins(Vivek Kaul's Diary)

    Aug 10, 2017

    Bill connects the dots...between money and growth, real money and real resources, gold and cryptocurrencies...and between gold, cryptocurrencies, and time.

    It's the Best Time to Buy IT Stocks(Daily Profit Hunter)

    Aug 16, 2017

    The IT Sector could be in an uptrend till February 2019. Are you prepared to ride the trend?

    Bitcoin Continues Stellar Rise(Chart Of The Day)

    Aug 10, 2017

    Bitcoin hits an all-time high, is there more upside left?

    5 Steps To Become Financially Independent(Outside View)

    Aug 16, 2017

    Ensure your financial Independence, and pledge to start the journey towards financial freedom today!

    Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
    Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

    LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

    SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

    Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
    Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407

    Become A Smarter Investor In
    Just 5 Minutes

    Multibagger Stocks Guide 2017
    Get our special report, Multibagger Stocks Guide (2017 Edition) Now!
    We will never sell or rent your email id.
    Please read our Terms


    Aug 23, 2017 03:36 PM


    • Track your investment in BHARTI AIRTEL with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
    • Add To MyStocks


    Compare Company With Charts