Bharti shifts focus in Africa from volume to value

The game has changed for Bharti Airtel in Africa. Sunil Mittal-led Bharti is now focusing on the value-oriented strategy, rather than the volume game that it played to penetrate the market initially. Africa was never a volume game, rather it was a relatively higher average revenue per user (ARPU) market.

 

In the immediate past quarter (July-September), the company has witnessed a sign of growth after three quarters. This is because; the company has shifted focus from just customer acquisitions. The strategy is now to focus on the markets with high-value customers, retail high-ARPU customers, and get users to its data-based services.

 

“Initially, Bharti needed to grab subscriber marketshare to penetrate the market which it has done. Now, it is time to inculcate value out of it,” said an analyst with a management consulting firm.

 

During the immediate past quarter, Bharti Airtel’s customer base in Africa increased just three per cent, while monthly churn marginally dropped to 6.6 per cent from 6.7 per cent in the previous quarter. During the July-September quarter, voice ARPU increased four per cent, while voice usage per customer rose seven per cent as compared with the previous quarter. Data customer base increased 13 per cent during the quarter with a 15 per cent increase in data ARPU at $1.5 while data usage per customer increased 21 per cent. Total data usage (megabites) on the network jumped 34 per cent. On year-on-year basis, data ARPU jumped 46 per cent, and total MB on network increased 97 per cent. But, voice ARPU declined 15 per cent on the year-on-year basis.

 

“Clearly, Bharti is focusing on the data based services which is under penetrated segment and would boost net realization in the coming quarters,” said a telecom analyst with a management consulting firm.

 

Meanwhile, Bharti’s net realization in Africa on both voice and data have come down during the July-September quarter. Voice realization has come down by about two per cent to US cent 3.3 and data realization (per MB) dropped by about four per cent to US cent 1.74 as compared with the previous quarter.

 

“The Africa market is coming back to growth. After three tough quarters, markets are buzzing again and showing good a growth momentum. Mobile customer base is growing again, rates are stable, mobile internet is growing and mobile commerce is booming,” said Managing Director Manoj Kohli, after announcing the quarterly results.

 

Revenue from the Africa operations rose about two per cent to $1.1 billion during the quarter, as against $1.09 billion in the corresponding quarter last year. However, the quarter-on-quarter revenue growth for the Africa business was about 5.4 per cent, primarily backed by net addition of about 2.18 million subscribers and about seven per cent improvement in minutes of usage on the network. Ebitda margins for the Africa business were almost flat, at 26.9 per cent, during the quarter.

 

Source: business-standard