According to CLSA, Bharti Airtel’s selling and distribution costs are nearly four times higher than Reliance Jio, as Airtel’s premium branding and pricing strategy are vital for acquiring and retaining high-value customers as well as sustaining its 12 per cent higher average revenue per user (ARPU) than Jio. CLSA estimates that Airtel’s selling and distribution expenses are at 8 per cent of revenue compared to Jio’s 2 per cent.
CLSA forecasts that Airtel’s estimated selling and distribution costs and associated costs will hit over Rs 152 billion in 2023-24, which is four times higher than Jio’s estimated Rs 38 billion. Jio’s selling and distribution spends are significantly lower as it benefits from Reliance Retail’s infrastructure, in-house media properties for advertising and lower spends on marketing and branding.
However, CLSA added that despite the lower number of data users, Airtel’s ARPU at Rs 203 during July-September 2023, was 12 per cent higher than Jio’s Rs 182. Between 2019-20, and the second quarter of 2023-24, Airtel’s ARPU increased by 50 per cent whereas Jio’s went up by only 40 per cent. This can be credited to the higher tariff flow through as Airtel’s post-paid tariffs are higher 25 per cent than Jio, while its overall tariffs are at a 20 per cent premium.
