Financial year 2022 seems to have started on a positive note for Bharti Airtel and Reliance Jio, with both operators reporting a strong performance during the first quarter. The two telcos recorded a positive year-on-year growth in consolidated revenues during the quarter ended June 2021. Further, Jio recorded a 44.9 per cent year-on-year growth in net profits while Airtel managed to turn around its profitability situation and recorded a net profit of Rs 2.84 billion during the quarter under consideration, compared to a loss of Rs 159.33 billion a year ago.

The demand for voice- and data-based services continued to grow in the quarter, as people continued to work from home amidst the Covid-19 pandemic. This contributed to revenue growth for the operators.

While there was a marked improvement in the two operators’ year-on-year performance, the sequential performance was rather sluggish owing to the second wave of the Covid-19 pandemic. For instance, on a sequential basis, Reliance Jio recorded only 4 per cent and 3.6 per cent growth in revenue and net profits respectively. Meanwhile, Airtel recorded a 62.7 per cent sequential fall in consolidated net profits during the quarter under consideration. Nonetheless, demand for data services is only growing and is expected to boost the ARPUs of the two operators in the near future.

A look at the operational and financial performance of Reliance Jio and Bharti Airtel during the quarter ended June 2021…

Reliance Jio

Reliance Jio continued to deliver a robust financial performance and reported a net profit of Rs 36.51 billion during the quarter ended June 2021, up from Rs 25.19 billion during the corresponding quarter last year. This growth was driven by an increase in subscribers and in data consumption. During the quarter, the operator recorded an average wireless data consumption per user per month of 15.6 GB and an average voice consumption of 818 minutes per user per month.

Further, the operator’s consolidated revenue from operations grew from Rs 172.54 billion in the quarter ended June 2020 to Rs 189.52 billion in the quarter ended June 2021. The consolidated earnings before interest, taxes, depreciation and amortisation (EBITDA) increased from Rs 73.32 billion to Rs 88.92 billion, and the EBITDA margin grew from 42.5 per cent to 46.9 per cent.

Jio’s sequential performance was affected by the second wave of the Covid-19 pandemic. Customer additions, nonetheless, remained strong. The operator witnessed net customer additions of 14.3 million during the quarter, driven by traction in the mobility and home segments. As a result, the operator’s subscriber base stood at 440.6 million, the highest among all operators.

The monthly churn rate for wireless subscribers declined further during the quarter to 0.95 per cent on the back of customer-focused initiatives to minimise Covid-induced disruptions. The operator’s ARPU stood at Rs 138.4 per subscriber per month, with an improved subscriber mix and better seasonality.

The total data traffic during the quarter stood at 20.3 billion GB, while the total voice traffic stood at 1.06 trillion minutes. Jio’s fibre-to-the-home services also witnessed increased demand due to the lockdown.

Moreover, during the quarter, Jio completed its deal with Google after obtaining the requisite regulatory approvals for an investment of Rs 337.37 billion in Jio Platforms Limited in return for a 7.73 per cent stake. With this, the company has received the entire amount of Rs 152.05 trillion.

Bharti Airtel

Bharti Airtel’s consolidated revenues for the quarter ended June 2021 stood at Rs 268.54 billion, registering a growth of 21.2 per cent year on year. Meanwhile, the telco reported a net profit of Rs 2.84 billion during the quarter, compared to a loss of Rs 159.33 billion a year ago. Although this is a significant improvement over last year, it marks a decline when compared to the previous quarter. The operator recorded a 62.7 per cent sequential fall in consolidated net profits.

In terms of consolidated EBITDA, Airtel witnessed an increase of 30.3 per cent year on year to Rs 131.89 billion during the quarter ended June 2021. The EBITDA expansion was broad based, stretching across the portfolio, with the Indian non-mobile and African businesses contributing 17.6 per cent and 29.5 per cent respectively, and the Indian mobile business contributing 53 per cent. This led to an improvement in the EBITDA margin from 43.4 per cent in the first quarter of financial year 2021 to 49.1 per cent in the first quarter of financial year 2022.

The consolidated mobile data traffic stood at 10,439 petabytes during the quarter, showing a healthy year-on-year growth of 48.7 per cent. Moreover, Airtel’s average data usage per customer stood at 18.5 GB per month during the quarter, while its voice usage was recorded at 1,044 minutes per customer per month.

Airtel’s India revenues during the quarter stood at Rs 188.28 billion, recording an increase of 19.2 per cent year on year on a comparable basis. Further, the operator’s mobile revenues grew by 21.9 per cent year on year on a comparable basis on account of improved realisations, as well as strong 4G customer additions. Its ARPU for the quarter stood at Rs 146, as compared to Rs 138 during the corresponding period a year earlier. The operator considers this growth in ARPU an outcome of its focus on acquiring quality customers and secular upgrading of customers to data. Further, the company recently hiked the prices of its post-paid plans by 20-50 per cent and of its entry-level prepaid schemes by over 60 per cent to boost ARPUs. Airtel’s ARPU continues to be the best in the industry.

The operator’s home business segment witnessed a revenue growth of 12.9 per cent year on year, with the highest ever

customer addition of 285,000 during the quarter ended June 2021, helping it reach a total base of 3.35 million.

Meanwhile, Airtel Africa reported an operating profit of $352 million, up 67.6 per cent in reported currency and 73.9 per cent in constant currency. Moreover, the telco’s profit after tax more than doubled to $142 million largely due to the higher operating profit and stable net finance costs, which more than offset the increase in tax charges due to increased profits.

The telco’s reported revenue grew by 30.7 per cent to $1,112 million. Strong revenue growth was recorded across all regions. The operator’s voice revenues grew by 26 per cent while its data revenues increased by 37.4 per cent and those from mobile money increased by 53.7 per cent. Its underlying EBITDA grew by 42.4 per cent to $534 million in reported currency, while its underlying EBITDA margin stood at 48 per cent, registering an increase of 396 basis points. This growth was fuelled by both revenue growth and improved operational efficiencies.

Airtel Africa’s customer base grew by 8.4 per cent to 120.8 million, with increased penetration across mobile data and mobile money services.

The way forward

Despite the hiccups caused by the second wave of the pandemic, both Airtel and Reliance Jio have been able to chart satisfactory growth. Going forward, while the Covid situation could pose problems for the operators in terms of customer additions, the demand for data is expected to only grow further. This could mean increased revenue from existing customers, thus translating into better ARPUs. ARPU growth will also be supported by the recent efforts of the operators to rework their plans in order to increase tariffs.

By Diksha Sharma