Feature

Battle Ready

As competition in the telecom sector intensifies, Bharti Airtel’s pricing strategy makes it a lucrative buy for the long haul

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Bled. Battered. Beleaguered. That’s how old incumbents such as Bharti Airtel and Vodafone Idea must feel as the two-year-old intense telecom battle with Mukesh Ambani-led Jio continues. The country’s richest man Mukesh Ambani’s decision to enter the telecom market for the second time, through the launch of Reliance Jio in 2016, disrupted the market brutally. Ambani loosened his purse strings and pumped $30 billion in infrastructure and optic fibre. The gambit yielded immediate results. Several players shut shop and old incumbents weakened. 

Unable to compete with never-seen-before low prices offered by Jio, smaller players such as Telenor and Tata Tele Services folded up. India’s telecom sector turned into a four-player market including state-owned BSNL. 

Hemant Kanawala Head equities, Kotak Life Insurance

Even as the sector consolidates, there are no signs of an increase in tariff anytime soon. “The tariff price hike depends on what Reliance Jio decides to do. Their stated objective is to be the largest player with 50% market share,” says Hemant Kanawala, head equities, Kotak Life Insurance. 

Holding on

As Ambani’s Jio continues to gain market share relentlessly, reaching 20.5% as of August 2018, few are able to put up a fight. Bharti Mittal, the chairman of Bharti Airtel, is one of those unwilling to budge. Year 2018 has been difficult but Mittal remains upbeat. 

Speaking to a news channel at Davos, Mittal made it clear that Airtel has now stopped playing the tariff war and increased the bottom slab of prices. Candidly, he accepted that the ailing telecom sector might not recover this year. But, he added, it may “perhaps” stop bleeding.

Going by Bharti Airtel’s latest results, the pain persists. But, the management is pulling a few tricks to counter Jio’s onslau

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