Ever since the entry of Reliance Jio in the Indian telecommunication market, every network operator has been facing a hard time in retaining its customers and acquire new ones, thanks to the competitive pricing set by the new entrant. It was well expected that the current leaders would face some losses and to confirm that, Bharti Airtel has reported that the profits they made in the last quarter were the least in the last four years.
India is the world’s second-biggest cellphone market and as much is the demand for smartphones, there is a similar one for network operators and choosing one doesn’t require only good services but also a price that is nearly the best in the market. Airtel has been the leader in the market but Reliance Jio with its free services for months and then, discounted plans for another few months has kept users attached to it even though the rivals have made their attempts with the best plans they have offered in the past few years.
Airtel has mentioned that its net profit has plunged nearly 71.7% from a year earlier to Rs. 373 crores ($57.7 million) in the three months ended March 31. The analysts forecasted that to be Rs. 528 crores. It was the smallest quarter for Airtel since the last quarter of 2012, as the revenue from operations fell 12% to Rs. 21935 crore.
“The sustained predatory pricing by the new operator has led to a decline in revenue growth for the second quarter in a row. The telecom industry as a whole also witnessed a revenue decline for the first time ever on a full year basis,”
said Gopal Vittal, MD and CEO, India and South Asia, Bharti Airtel said in a statement.
“The deteriorating health of the industry was compounded by the tsunami of incoming voice traffic from the new operator as a result of which significant investments had to be made just to carry the incoming traffic on our network,” he added.
The ARPU (average revenue per user) has fallen by 8% from the previous quarter and now it is about Rs. 158. On the contrary, in Africa where the network provider offers its services, Airtel’s operations rose 2.6% on the same period last year.
According to analysts, the offer of cheaper data and long-term plans from Jio are going to continuously pressurize the other networks in the market, including Airtel, Idea, Vodafone, BSNL, and Tata Docomo. This will, in turn, lead to lesser profits and decrease in ARPU if these networks are to retain their current subscribers.