Bharti Airtel’s focus in recent years has been on premiumisation of its subscriber mix and analysts do not expect a rollback in Bharti’s entry-level price hikes. 
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Bharti Airtel’s focus in recent years has been on premiumisation of its subscriber mix and analysts do not expect a rollback in Bharti’s entry-level price hikes. Reliance Industries (RIL) arm Reliance Jio has launched a new phone Jio Bharat at Rs 999 targeted at 2G subscribers, which a couple of brokerages said could disrupt telecom market, increase competitive intensity and delay hikes in pre-paid tariffs going ahead.
The internet-enabled Jio Bharat feature phone priced at Rs 999 will facilitate the transition of 2G users to 4G network in India. Jio Bharat recharge plan starts at Rs 123 for 28 days, which is 30 per cent cheaper against Bharti Airtel plan and offers 14 GB data, which is about 7 times more than Bharti Airtel and other mobile operators.
At 10 am, shares of Bharti Airtel were trading 1.62 per cent lower at Rs 864.85 on BSE.
Emkay Global said Jio Bharat is better placed to disrupt the market against the original JioPhone in 2018, as it is a more-focused product, has simpler value proposition and has better distribution and production planning.
"We believe Jio Bharat can again transition over 10 crore subscribers if there are no supply chain or product-performance hiccups. Vi and Airtel had 10.3 crore/11.1 crore 2G subscribers, respectively, at Q4FY23-end, and the shift of 40 per cent of 2G users to Jio Bharat may impact their India mobile revenue by 11 per cent/8 per cent and impact mobile Ebitda by 19 per cent/11 per cent. It will impact Airtel’s consolidated Ebitda by 6 per cent," the brokerage said.
The launch will delay the tariff hike discussion further, it added.
Kotak Institutional Equities said non-data subscribers account for 30 per cent of Bharti’s paying subscribers, but their revenue contribution would likely be lower at 15-17 per cent, based on our estimates.
"Further, we note Bharti’s focus in recent years has been on premiumisation of its subscriber mix (higher entry-level packs, cashback on bundled smartphone purchases) and we do not expect a rollback in Bharti’s entry-level price hikes even if there is a slight acceleration in churn among its lower-end subs," Kotak said.
In the case of Vodafone Idea, non-data subscribers account for 40 per cent of Vi’s paying subscribers and contribute 15-20 per cent to Vi’s wireless revenue, as per Kotak's estimates. Vi had recently reduced validity on Rs 99 minimum recharge pack from 28 days to 15 days in 3 circles, Kotak noted but added that Vi may now take a more calibrated approach on further hikes at lower end.
"The launch of internet-enabled JB phones could potentially raise concerns on rising competitive intensity even at the lower end, especially when incumbents (Bharti and Vi) have raised the prices for entry-level packs sharply. JB bundles Jio’s Entertainment Apps and provides higher data allowances (versus incumbents’ current plans), but we believe additional upfront device cost would restrict the uptake to new feature phone buyers rather than existing feature phone subs of incumbents (would take 500-874 days to recover device cost)," Kotak said.
"We believe the return profiles of telecom operators could remain suppressed in the near to medium term, given the competitive intensity and the advent of the 5G capex cycle. Bharti, however, remains well placed on account of its industry-leading ARPU and strong balance sheet," Nuvama said.
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