Higher rural push likely to help co dominate market

Bharti Airtel’s better-than-expected performance in the March 2009 quarter amidst intense competition and falling tariffs reflects its commanding position in the 584-million-strong domestic wireless market. Moreover, the telco may continue to dominate the revenue share of the domestic market given its investments in rural areas that are witnessing a higher mobile penetration.

The Street had estimated that Bharti would report a near flat growth of 0.9% sequentially in revenue and a sharp 9% dropin profit for the March quarter. The pessimism was on account of fast deteriorating average revenue per user (ARPU) and minutes of usage (MoU) in the past few months.

However, a surprise jump in MoU, a first in the past seven quarters, and a marginal fall in ARPU helped Bharti post a 3% growth in revenue and a drop of 7% in profit. MoU rose sequentially by 5% to 468 minutes. ARPU fell by 4.6% to Rs 220, lower than expected fall of 9%.

It also reported a rise of 12% in network usage measured in terms of total minutes on network.Bharti’s performance regarding these user-based operational parameters raises optimism over its ability to sustain and grow despite the challenging environment.

Another way to look at Bharti’s performance amidst entry of new telcos is to consider its dominance in the domestic market. Its share of total customer base has shrunk to about 22% from 24% a year ago reflecting the impact of new incumbents. However, this has not affected its revenue share. In fact, it has grown from just over 29% to 31%.