NEW DELHI: Vodafone idea might be struggling to stay afloat in choppy waters, but the markets seem to think rival Bharti Airtel has done much better in handling the onslaught from new entrant Reliance Jio. While Airtel posted a consolidated net loss of Rs 2,866 crore for the first quarter of FY20, its first such loss in more than a decade, its scrip rose 6.02 per cent in value on Friday.
This is in stark contrast to how the markets reacted to Vodafone Idea’s Rs 4,900 crore net loss, which saw its stock tank by 27 per cent on Monday. The scrip has only fallen in value since, standing at `6.31 on Friday against `9.25 a week ago. The difference in reaction is due to the nature of the losses posted by the two incumbent telecom majors.
While Vodafone Idea’s was accompanied by a sequential fall in revenues (4.3 per cent), contracting customer base and customers shifting to cheaper packages, Airtel’s loss has been primarily driven by a one-time exceptional loss of around `1,440 crore due to depreciation in its 3G network equipment, among other things.
But, in contrast to Vodafone Idea, Airtel’s operational metrics have steadily improved, with Average Revenue Per User (ARPU) for local mobile services rising sequentially to `129 from `123 the previous quarter (`108 for Vodafone Idea) and operating margin rising by 6.4 per cent. Its India mobile services revenues also grew 2.2 per cent sequentially and 4 per cent compared to Q1FY19. Airtel’s network expansion was ahead of Vodafone Idea’s, with the number of towers growing by 2.6 per cent against the latter’s 1.1 per cent.
In fact, Airtel recorded the highest ARPU among the top three players in Q1, with Jio’s APRU steadily falling over the quarters to Rs 122 from over Rs 150 just two quarters earlier. “Bharti’s ahead-of-Vodafone Idea network investments, slightly better quality of subscriber base, and some success of its loyalty/partnership program are all playing a role on its superior relative performance to Vodafone Idea,” Kotak Institutional Equities said.