Airtel Clarifies Why It Has Not Chosen to Compete With Reliance Jio’s VoLTE Feature Phone

Earlier, we reported how Airtel’s absence in the VoLTE feature phone department is costing its subscribers an opportunity to take down Jio once and for all. In the latest development, Airtel has come forth to clarify why it has not chosen to compete with Reliance Jio‘s VoLTE feature phone. The telecom operator is working on the strategy that will churn out benefits in the longer run.

Airtel Will Continue to Focus on High-End Customers

While it is tempting to get a hold of the feature phone user-base, Airtel will still continue to focus on its long-term high-end subscribers. The management clarified its intention with the high-end subscribers after the Q2 results. Analysts believe that this could be a smart move to grow the minimum average revenue per user (ARPU) in the longer run.

“We have chosen not to yet compete in the VoLTE feature phone space because we believe that there are customers already who are using our networks on feature phones. So our focus will be to actually get them to upgrade directly to smartphones,” Gopal Vittal, CEO, Bharti Airtel said while addressing analysts after the September quarter results.

This strategy is toeing the line of Airtels’ strategy to increase the ARPUs through revised prepaid recharge plans as well as the aggressive roll-out of the 4G sites to build a smartphone-led subscriber base. To recall, Airtel rolled out cashback offers for subscribers upgrading to smartphones. People expected an impulsive response from Airtel post the overwhelming response to Reliance Jio’s feature phone offer, that was launched in August. However, Airtel decided not to jump the guns as it was working on a better strategy to keep its user base intact.

Furthermore, the telecom operator has also introduced low ARPU plans across select circles and plans to expand it across the country to provide the much-needed attenuation amongst its lower ARPU subscriber base. Analysts also believe that Airtel lost a good part of its high-end ARPU prepaid subscriber base to Reliance Jio’s feature phone offering. A report by Sanjay Chawla from JM Financials reveals that Airtel’s user base reduced by over 6.6 million in the quarter due to the exchange offer on Jio feature phone.

Airtel Looking for Long-Term Benefits

Airtel CEO, Gopal Vittal explained the telecom operator is looking to up their game with the 4G subscribers and improve network capacity. This will help the telco build and manage a loyal user base in the longer run. He said, “In the high-value prepaid segment, largely smartphones, this is where we believe that we really need to step up our act to actually win with 4G (subscribers) with this dramatic move that’s taking place between feature and 3G phones (users) to 4G (users)”. Further, the management also believes reducing the 2G and 3G base will help take the pressure off Airtel’s selling, administrative, and general expenses.

“By extending the minimum tariff strategy across India, Airtel has chosen to sacrifice near term for the long term. We have a positive view on this strategy and will monitor ARPU improvement & outgoing call proportion to measure success,” stated Ravi Menon, an analyst at Elara Capital in a report. Analysts also believe the network quality and content offering will be major factors in building a loyal subscriber base in the near future. Although Airtel is a little late with its digital content offering as compared to that of Reliance Jio, this could still be a key differentiator to attract new customers and maintain the existing ones.

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