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Bharti Airtel (BRTI.BO)
Market Share Loss – More Than Just a Leader’s Curse
Bharti’s top line has been slower than peers — Bharti’s topline has grown slower v/s
peers (Voda/Idea) over the last few qtrs; generally attributed to scale, and a lesser
extent to its less aggressive pricing approach. A deeper analysis over last 10qtrs, in
their top 5 circles (45-55% of revs) suggests Bharti has a) grown top-line slower in its
biggest circles b) lost rev/share across more circles (4/5 v/s1/5 & 1/5 for Idea/Voda);
and 3) GSM peers have done relatively better in key overlapping circles.
Revenue share loss in 4/5 top circles – While Bharti’s overall revenue growth at
1.4% has lagged peers (Voda – 2.6%, Idea- 3.9%), it has lost share in 4/5 of its largest
circles; ranging from 180-590bps (Karnataka, its biggest market -11% of rev, lost
300bps). In contrast, Idea/Voda have lost mkt share in only 1/5 of their biggest circles
(20/180bps respectively ) – with revenue share gains of 110-470bps (Vodafone) and
120-660bps (Idea) respectively, in the remaining 4/5 circles. Bharti is losing ground in
its biggest sectors – its competitors are gaining share in their own biggest circles.
Idea & Vodafone have done better where they lead or overlap — Idea, even its
largest circle (Maharashtra), saw higher topline (4.4% v/s 1% for Bharti in last 10 qtrs).
Vodafone too has done better in overlapping circles (TN/Delhi) - gaining 360/470bps
rev share v/s Bharti’s 180/590 loss. Interestingly even in Mumbai, Vodafone’s rev share
loss (180bps) is low compared to Bharti (310bps). Bottom-line, Bharti’s revenues have
lost ground to its major and marginal competitors.
Combination of premium pricing and a reluctance to match competition – In our
view, Bharti’s sub-par performance is because of its reluctance to match tariffs, even as
competition does so. It’s imputed ARPU (even in circles where it lags Idea/Voda), has
been at a premium to peers; potentially leaving it susceptible even in a stable pricing
market. Most recent data (4Q11) suggests some rebalancing by Bharti (7% ARPU fall
in top 5 circles; 2-4% for Voda/Idea), but further risks remain.
Some further trade-off ahead? – We believe some of the premium pricing pain has
already been borne by Bharti – but some risks remain given its still premium pricing /
ARPU (30% higher), and recent revenue trends vis-à-vis its primary competitors.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Bharti Airtel (BRTI.BO)
Market Share Loss – More Than Just a Leader’s Curse
Bharti’s top line has been slower than peers — Bharti’s topline has grown slower v/s
peers (Voda/Idea) over the last few qtrs; generally attributed to scale, and a lesser
extent to its less aggressive pricing approach. A deeper analysis over last 10qtrs, in
their top 5 circles (45-55% of revs) suggests Bharti has a) grown top-line slower in its
biggest circles b) lost rev/share across more circles (4/5 v/s1/5 & 1/5 for Idea/Voda);
and 3) GSM peers have done relatively better in key overlapping circles.
Revenue share loss in 4/5 top circles – While Bharti’s overall revenue growth at
1.4% has lagged peers (Voda – 2.6%, Idea- 3.9%), it has lost share in 4/5 of its largest
circles; ranging from 180-590bps (Karnataka, its biggest market -11% of rev, lost
300bps). In contrast, Idea/Voda have lost mkt share in only 1/5 of their biggest circles
(20/180bps respectively ) – with revenue share gains of 110-470bps (Vodafone) and
120-660bps (Idea) respectively, in the remaining 4/5 circles. Bharti is losing ground in
its biggest sectors – its competitors are gaining share in their own biggest circles.
Idea & Vodafone have done better where they lead or overlap — Idea, even its
largest circle (Maharashtra), saw higher topline (4.4% v/s 1% for Bharti in last 10 qtrs).
Vodafone too has done better in overlapping circles (TN/Delhi) - gaining 360/470bps
rev share v/s Bharti’s 180/590 loss. Interestingly even in Mumbai, Vodafone’s rev share
loss (180bps) is low compared to Bharti (310bps). Bottom-line, Bharti’s revenues have
lost ground to its major and marginal competitors.
Combination of premium pricing and a reluctance to match competition – In our
view, Bharti’s sub-par performance is because of its reluctance to match tariffs, even as
competition does so. It’s imputed ARPU (even in circles where it lags Idea/Voda), has
been at a premium to peers; potentially leaving it susceptible even in a stable pricing
market. Most recent data (4Q11) suggests some rebalancing by Bharti (7% ARPU fall
in top 5 circles; 2-4% for Voda/Idea), but further risks remain.
Some further trade-off ahead? – We believe some of the premium pricing pain has
already been borne by Bharti – but some risks remain given its still premium pricing /
ARPU (30% higher), and recent revenue trends vis-à-vis its primary competitors.
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