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The Big 3 of Indian telecom – Bharti Airtel , Vodafone India and Idea Cellular – are going flat out to boost revenues from a clutch of secondary business verticals such as enterprise, wired or `home’ broadband, direct-to-home (DTH) digital TV services, mobile wallets and wholesale global voice and data services to partly offset revenue challenges in their mainline mobility operations, stung by demonetisation and Reliance Jio Infocomm’s continuing freebies.
Market leader Bharti Airtel is also counting on rapid expansion of its fledgling payments bank business to prise open new revenue streams, increase customer stickiness and reduce churn over the next three-to-four quarters, amid rising competitive intensity, a person familiar with the matter told ET.
Analysts and industry experts, in fact, said Airtel is “best positioned” to leverage revenue growth from its additional lines of business, which collectively generate nearly a quarter of its annual revenue, unlike Idea and Vodafone India which largely depend on their dominant mobile services business that garner over 90% and 84% of overall revenues respectively.
Another immediate revenue driver for Airtel, they said, could be the company’s global voice and data wholesale business. Last week, the Sunil Mittal-founded telco’s international fibre optic cable link between India and Myanmar went live to meet capacity needs of global enterprise customers in the neighbouring country by leveraging its vast international network, a move aimed to tap into a sizeable wholesale data revenue opportunity.
Jaideep Ghosh, Partner (Management Consulting) at KPMG in India, said Airtel, by virtue of its comparatively stronger fixed-line network presence and its own international undersea cable system, is better equipped than either Vodafone or Idea to boost enterprise business revenues in the coming quarters”. As much as 10% of Airtel’s revenues came from its enterprises business in the September quarter.
Suresh Sethi, who heads Vodafone India’s M-Pesa wallets services business, said “there’s a definite push in the other businesses besides retail, but there has been no change in our (revenue growth) targets for the next few quarters”.
Going forward, analysts expect Vodafone India to also benefit by way of fresh revenue streams and a bigger play in the home broadband space once it receives Foreign Investment Promotion Board (FIPB) approval for buying YOU Broadband, a leading ISP. Integration of YOU Broadband into Vodafone India, they said, would also enable the country’s No 2 phone company to combat more effectively with Jio in the broadband space.
Another industry executive familiar with developments at Idea Cellular, in turn, said the third-largest phone company is focusing equally on core mobile operations -- accounting over 90% of revenues -- and other businesses like long-distance & internet services and M-wallet services to “address macro negatives” posed by Jio’s free services and demonetisation.
Airtel, Vodafone India and Idea declined to reply to ET’s emails at press time.
Industry experts, however, are quick to stress that incumbent biggies could be compelled to initiate some cost-optimisation measures to overcome the short-term pangs of demonetisation and Jio’s free services since overall incremental revenues from other businesses cannot offset reduced revenues from the mobility business envisaged over the next 3-to-4 quarters.
“One can expect near-term cost management/control measures from incumbents, including a re-negotiation of long-term vendor/service contracts, a possible reduction in throughput and network management-related outflows, lower advertising, branding & marketing spends and even people costs to manage the short-term pain,” Hemant Joshi, Partner, Deloitte Haskins & Sells LLP, told ET.
Another top telco executive is skeptical about Airtel’s chances of shoring up revenues from its new payments banks business in the near-term, asserting that the market leader could “face mounting customer acquisition costs if it targeted aggressive growth in the short term.
However, he reckons Airtel’s fixed-line/enterprise business can turn out to be profitable, regardless of the “longish time-lag between capital deployment and return on investment”.
The country’s top three incumbent operators have been stung by a mix of Jio’s free services and demonetisation, which analysts said could reduce their Ebitda margins by over 200 basis points (bps) over the next six-to-12 months, and also depress data revenue growth.
Idea Cellular: reliance jio effect: telcos pushing secondary verticals for revenue, Telecom News, ET Telecom
Market leader Bharti Airtel is also counting on rapid expansion of its fledgling payments bank business to prise open new revenue streams, increase customer stickiness and reduce churn over the next three-to-four quarters, amid rising competitive intensity, a person familiar with the matter told ET.
Analysts and industry experts, in fact, said Airtel is “best positioned” to leverage revenue growth from its additional lines of business, which collectively generate nearly a quarter of its annual revenue, unlike Idea and Vodafone India which largely depend on their dominant mobile services business that garner over 90% and 84% of overall revenues respectively.
Another immediate revenue driver for Airtel, they said, could be the company’s global voice and data wholesale business. Last week, the Sunil Mittal-founded telco’s international fibre optic cable link between India and Myanmar went live to meet capacity needs of global enterprise customers in the neighbouring country by leveraging its vast international network, a move aimed to tap into a sizeable wholesale data revenue opportunity.
Jaideep Ghosh, Partner (Management Consulting) at KPMG in India, said Airtel, by virtue of its comparatively stronger fixed-line network presence and its own international undersea cable system, is better equipped than either Vodafone or Idea to boost enterprise business revenues in the coming quarters”. As much as 10% of Airtel’s revenues came from its enterprises business in the September quarter.
Suresh Sethi, who heads Vodafone India’s M-Pesa wallets services business, said “there’s a definite push in the other businesses besides retail, but there has been no change in our (revenue growth) targets for the next few quarters”.
Going forward, analysts expect Vodafone India to also benefit by way of fresh revenue streams and a bigger play in the home broadband space once it receives Foreign Investment Promotion Board (FIPB) approval for buying YOU Broadband, a leading ISP. Integration of YOU Broadband into Vodafone India, they said, would also enable the country’s No 2 phone company to combat more effectively with Jio in the broadband space.
Another industry executive familiar with developments at Idea Cellular, in turn, said the third-largest phone company is focusing equally on core mobile operations -- accounting over 90% of revenues -- and other businesses like long-distance & internet services and M-wallet services to “address macro negatives” posed by Jio’s free services and demonetisation.
Airtel, Vodafone India and Idea declined to reply to ET’s emails at press time.
Industry experts, however, are quick to stress that incumbent biggies could be compelled to initiate some cost-optimisation measures to overcome the short-term pangs of demonetisation and Jio’s free services since overall incremental revenues from other businesses cannot offset reduced revenues from the mobility business envisaged over the next 3-to-4 quarters.
“One can expect near-term cost management/control measures from incumbents, including a re-negotiation of long-term vendor/service contracts, a possible reduction in throughput and network management-related outflows, lower advertising, branding & marketing spends and even people costs to manage the short-term pain,” Hemant Joshi, Partner, Deloitte Haskins & Sells LLP, told ET.
Another top telco executive is skeptical about Airtel’s chances of shoring up revenues from its new payments banks business in the near-term, asserting that the market leader could “face mounting customer acquisition costs if it targeted aggressive growth in the short term.
However, he reckons Airtel’s fixed-line/enterprise business can turn out to be profitable, regardless of the “longish time-lag between capital deployment and return on investment”.
The country’s top three incumbent operators have been stung by a mix of Jio’s free services and demonetisation, which analysts said could reduce their Ebitda margins by over 200 basis points (bps) over the next six-to-12 months, and also depress data revenue growth.
Idea Cellular: reliance jio effect: telcos pushing secondary verticals for revenue, Telecom News, ET Telecom
