New Delhi: In a war to take over India billion plus mobile service market, Sunil Mittal seems to be struggling to give a fight to Mukesh Ambani Reliance Jio.
Fourth quarter in a row, Mittal Bharti Airtel Ltd. shored up its income with one-time gains masking headwinds posed by upstart Reliance Jio Infocomm Ltd. Jio roll-out, after its 2016 debut, has knocked Airtel from its perch in a consolidation that shrank the industry to three players from about a dozen four years ago.
Airtel is facing a tough time to add subscribers in a saturated market after Jio managed to attract more than 300 million users over the past three years, a quarter of the world second-largest market. The aggressive expansion of Jio with free calls and cheaper data backed by the deep pockets of Asia richest man was bad news for highly indebted incumbents engaged in a tariff war that had pushed call rates to less than a cent.
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The earning of Airtel is also contracting as the company bears the burden of $17 million debt- the highest among Asian peers. Instead of the debt, Airtel is planning to spend fortunes on 5G airwaves at a government auction in coming months.
As per telecom industry analyst Anthea Lai, “Airtel profit will suffer until Jio is ready to raise prices. It is hard to say when, but Jio may remain aggressive until it achieves the No. 1 spot in mobile revenue. In the meantime, Airtel is trying to weather through by preserving margin at the sacrifice of subscriber loss, divesting assets to ease debt burden, and raising equity to avoid a credit downgrade.”