Airtel to step up investments in home broadband to take on Jio GigaFiber

MUMBAI: Telecom operator Bharti Airtel is stepping up its investment in the wired broadband business to counter Reliance Jio’s fibre-to-the-home (FTTH) service Jio GigaFiber.

Speaking to analysts during the Q1 FY19 earnings call conferenceBharti Airtel MD and CEO India Gopal Vittal noted that India is an under-served market in broadband. The company is planning to expand its home pass footprint to 2 million in FY19. Airtel had 2.2 million wired broadband customers, as on 31 May.

“There clearly is a big opportunity to expand home broadband. For the last couple of years, we have been rolling out about 500,000 to 600,000 home passes. This year, our plan is to step it up to close to 2 million. We have begun this quarter in a slightly slower wicket, it takes time to ramp up, getting clearances and permissions and all. So you will see a step-up in our broadband, home broadband investment during the course of this year,” he said.

Queried whether Airtel will look at acquisitions in the cable TV space to compete with Jio, Vittal said that there are several challenges in pursuing that strategy. “On the cable part, it is a bit speculative for me to answer that question. I think there are several challenges there in terms of the quality of the network, the permissions on the last mile fiber and so on and so forth,” he averred.

Elaborating further, Bharti Airtel CFO India & South Asia Badal Bagri said that the company has plans to roll out at least 2-2.5 million home passes in FY19. It is also looking to replace copper cables wires with fibre optic cables in marquee markets. “That could be another 1-1.5 million home passes all of it is planned in the next 3, 4 to 5 quarters,” he said.

Bagri also said that the company has maintained 40% to 45% of EBITDA margin for its home broadband business. “Despite the pricing pressures, we have been able to hold and maintain it. And long-term, we feel that there could be small short-term pressures out here. But overall, in the long run, this is an extremely profitable segment and a stable segment for us to be in,” he noted.

Bharti Airtel Global CFO Nilanjan Roy said that the company is expanding the fixed broadband network deeper and wider by offering speeds up to 300 Mbps and higher using FTTH and vectorisation. He also highlighted the other initiatives being undertaken by the company to ensure customer retention.

“Plans now also come with bundled content like Amazon Prime membership plus subscription-free access to Airtel TV, Wynk Music. To enhance the customer experience by bundling their various relationships with Airtel as one, we also recently launched “One Home One Bill”- which enables a single bill across postpaid, fixed broadband and DTH, and discounts on bundles therein,” Roy stated.

Vittal also said that the telecom operator will be cautious about its content investments due to the challenges of monetising content in the current market. That said, he noted that the Airtel TV offering has helped the company to bring down churn.

The telecom operator has been ramping up the content offering for its over the top (OTT) app Airtel TV. It has extended the freeview period for the video streaming platform till 30 December.

Airtel TV offers 350+ Live TV channels in addition to the best of movies and TV shows from HOOQ, Eros Now, Sony Liv, ALT Balaji, among others. In June, it had reached the milestone of 50 million downloads.

“On the content side, I think we are currently providing content now free till December. And we believe monetizing this content is a challenge in this market. So we are going to be very, very smart and careful about the sort of content investments we make. We are not going around making large content bets and investments,” Vittal stated.

He also said that the telco will prefer to use alliances with content owners to drive content offers with the customers. He cited the example of Amazon Prime and Netflix which will be provided as an add-on to high-end customers.

“You have seen what we’ve done on our postpaid side through a combination of 2 things. One is leveraging the family or the add-on, coupled with providing content like Amazon to high-end customers and even perhaps Netflix to super-high-value customers. We will use all of these relationships as well to actually play in the content space, while we continue to drive Airtel TV with content from linear television and a bunch of other webisodes and so on, which are available on the platform,” he said.

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