The last paragraph is indeed interesting :
Disc : Part of my satellite portfolio.
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- How much fair is it for asking AGR dues on the basis that Airtel has acquired Vodafone’s spectrum:
For me this kind of development, do not even leave margin of safety.
Can anyone help in understanding, how much impact this may cause to Airtel.
- Was even looking their Africa numbers. They doesn’t look that good either.
Disc : Part of my satellite portfolio.
From what I remember, the hit to Airtel will be 13K (aircel 12K+ & videocon 1K+). For Jio it will be 25K+. So, I guess loss will be more to Jio, if the risk is materialized. Jio will be forced to raise tariffs in that case. Due to nature of transactions between Airtel and aircel/videocon vs Jio and RCOM, court could ask only Airtel to pay & let Jio go. In that case, my thesis mentioned could go wrong.
Disc: invested @530 rs recently (<5% of PF)
Now only two players left…Jio & Airtel.
These are long term plays…
There may be temporary setback…
The risks mentioned above seems to have already been factored in Current price of Airtel which hovers around Rs 530…
For a long time the Airtel stock was traded in a narrow band of Rs560-580…
Discl : Invested…may be biased… please make your own assessment before investing
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We are comparing Airtel & Jio. Unfortunately Jio is not independently listed.
Hence, Airtel becomes pure play listed company.
With so many multiple investments coming in Jio, it would be easier for Jio to shell out the kind of money, even if they are asked to pay.
Airtel is already under pressure & their debts looks substantial. Paying Videocon’s dues would be over & above.
What if only Airtel is pushed to increase their rates & what kind of impact that would bring on their numbers.
As of now unknown risk seems to be increasing.
Even if this becomes a longterm play. How long is that long is to be seem.
Disc : Invested in satellite portfolio.
Telecom is an essential utility and we are left with last two for 1.3 billion people. So no government in its right senses can allow any one of these two to go down at any cost. So over long term returns would be decent. But government may not allow them to charge extortionist prices for the same reason.
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This is what we had been discussing for past few days :
My two cents :
- How much would be the tariff rise.
- What kind of impact would it have on subscriber base.
- Chairman says inc. ARPU to above Rs 200 in 6 months & ideal is Rs 250. Which means almost double from last hike.
- What would be the response from rest of the surviving players (Jio, Voda, BSNL)
Eventually they also really want money.
Disc : Invested in satellite portfolio.
Another update on Airtel Africa (Africa seems to be going strong for Airtel) :
With a partnership with partner like Moneygram, it does further substantiate brand value for Airtel.
Disc : Invested in satellite portfolio.
Jio Fiber has revamped tariffs making them attractive. Though the broadband revenues are negligible at 2-3 percent, growth of wired broadband, particularly in small towns, has been a factor in foreseeing the growth of revenues of Bharti Airtel. With less than 10 per cent share of fixed broadband, there is potential for growth in Indian market and Airtel was growing its fixed broadband revenue at high single digits.With the latest slash of tariffs from Jio, such growth in broadband may not be possible.
This should start the price increase journey for all telco’s for next 1 year…
BSNL is market leader. This will be clear case of value migration from BSNL to pvt sector and both Jio and Bharti will gain.
Fiber connection customers are typically middle class+
Bharti service levels are very good and majority of customers are unlikely to shift for a plan which is slightly cheaper.
From all the articles, it seems price hike is just around the corner and it could be a big one too… as it will be first hike post AGR ruling. Once that happened, it will bring back focus to Telecom companies once again.
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HI,
Moody’s revises Bharti Airtel rating outlook to stable from negative
Read more at:
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https://www.capitalmind.in/2020/09/why-is-bharti-airtel-stock-underperforming/
Why is Bharti Airtel stock underperforming?
Disc : Invested and keep on adding in dips.
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Went through the article. Outlines the underlying issues really well.
The market has indeed been brutal in its discounting and it would take a brave investor to get in now. Let’s see what happens.
While I agree to the overall theme of the article, I believe it is overplaying the risks (and underplaying the benefits) merely to support its argument of lower stock prices. From my personal as well as experience of my friends and family, I can say that broadband and post paid are two most sticky customers. Also these categories are more sensitive to the service and less sensitive (as compared to pre paid) to price of the service.
For example - I live in large society where vodaphone owned You broadband and BSNL are the two primary broadband suppliers. Society has been approached by Tata Sky and Jio for broadband connectivity with better rates but as all wiring is concealed, it will be huge task to connect all the society buildings and all homes with broadband from new supplier. So unless current suppliers service becomes poor (which is happening slowly), society members are not willing to allow another supplier to come in. Also there is risk of too many service providers coming into society for broadband work(and may be sabotaging each others network), which society members are not comfortable with , in these times of pandemic.
On post paid mobile side - most of the post paid customers are busy executives who wants better service and don’t have time to go through the pain of changing service providers for few rupees per month.
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True. A lot of people are shifting to Airtel from Jio as Jio network gets congested and people not getting data rates which they were getting earlier.
So it is bit tricky. If you have too many customers with cheap data plans, overall experience will suffer as a huge use base binges on cheap data; unless you make huge investments on network.
Somewhere balance will get restored. So unlike platform business, telecom is not winners take it all business. A fine balance remains between few players. That is evident by the fact VodaIdea continues to remain in the game and not shutting shop.
Jio can continue with troubling tactics as it has cash to burn and needs to show growth to new investors and may be impending Nasdaq listing.
Quick guesstimates shows, Jio is being valued at 2x of Airtel for similar revenue and profitability.
Also, Airtel has huge base of enterprise customers which will stick with reliable and better customer service.
Disc: Invested from higher levels and may be biased.
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Word on the street is that Jio is launching an affordable smartphone priced at Rs. 4000. And this could be a serious blow to Airtel and Vodafone-Idea (Vi). Well, the answer lies in the massive 2G user base in India. Airtel has 13Cr and Vi has over 17Cr 2G users. 47% of Airtel’s and 60% of Vi’s users are on 2G
Even when Jio launched free calls and cheap data plans, they couldn’t get a lot of 2G subscribers to shift to Jio
The reason being, Jio’s 4G sim only works on a 4G phone. And most 4G smartphones sold at the time were still expensive for low-income groups. Although Jio released a 4G feature phone, it didn’t manage to convince a lot of people to switch. However that might be changing now
Jio is partnering with Google to launch affordable smartphones priced at ₹4000. And word on the street is that Jio has asked Indian suppliers to augment their production capacity so that Jio could push out 20 Cr smartphones in the next 2 years
If Jio were to be successful in making an affordable 4G smartphone, it can be a serious blow to Airtel and Vi. On the flip side, Indian manufacturers like Dixon, Lava, Karbonn would receive a big fillip since they could put some of their manufacturing capacity to good use
SOURCE: twitter thread finmedium
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And this Rs4000 smart phone user base is again a low ARPU user base… it may help shore up the numbers but not the ARPUs…getting post-paid high ARPU customers of other networks is not going to be easy for Jio especially for something like a Rs100 benefit per month… the sheer task of switching networks will preempt many people from doing so, especially if they are not unsatisfied with their existing connectivity
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