Bharti Airtel v/s Reliance Jio – Investometry

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You might have heard a lot of noise about bharti airtel as many research analysts are talking about it. Airtel is now on every investor’s tongue because of the results posted. In this article I will be sharing some information on bharti airtel and reliance jio, two major giants in the telecom industry. 

Stock price of bharti airtel is souring these days as many investors and analysts believe the future of bharti is bright and can perform well. As we all know telecom companies were facing huge problems for years but now I see those days are slowly getting over. The impact of covid 19 obviously seems negative in the short term but if you think of a bigger picture it can be a positive sign for such companies. And why I think this is because due to the crisis, many companies believe that their employees can work from home and employees also said that they are more productive in working from home. At this time many employees are already working from home and I believe this can become a new trend except for the manufacturing kind of companies. So if people start working from home, data consumption will eventually increase which will directly benefit these companies.

Let’s quickly do a very short review on the Q4 FY20 results.

In Crore Airtel Jio
Subscriber base 28.40 38.75
YOY Growth % 2% 26.3%

Bharti airtel posted profit before tax (PBT) as Rs. -7010Cr. The negative sign represents the loss. The company’s management said the loss was due to the one time payment for spectrum charges to the regulator which was of Rs. 7004 Cr. Bharti airtel has business in india and africa but in this article i will focus on the Indian business as we will compare airtel and jio and jio only operates in india itself. 

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Let’s talk about the subscriber base of both the companies.

In Crore Airtel Jio
Subscriber base 28.40 38.75
YOY Growth % 2% 26.3%

As you can see in the table, Subscribers of Jio(28.4Cr) are more than airtel (38.75Cr). Reliance jio has played a very big role in subscription. Jio came in december 2015 and acquired a large amount of customers in a short span of time while airtel is in the market for decades. But a positive growth of airtel this quarter as they were losing subscribers but a growth of 2% has been seen in this quarter.

One of the important terms is ARPU that is average revenue per user. ARPU is simply defined as the average revenue the company receives per customer. We get the number by dividing revenue with the total number of customers as simple as that. This number plays a major role in defining the health of a company so let’s see what is the ARPU of airtel and Jio.

Given below is the table of ARPUs of Airtel and Jio.

Rs. per Month Airtel Jio
ARPU 154 130.6
YOY Growth 25.2% -2%

ARPU of Airtel stands at Rs 154 and jio at Rs. 130.6. Though the subscriber base of jio is more, airtel is getting more revenue per user and this quarter it has increased by 25% which is a very positive sign for the company. Subscribers of jio skyrocketed as they first started giving free data, free voice calls due to which many customers started attracted by jio but as soon as they started charging their customers, usage started decreasing slowly. 

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Let’s jump on to the voice on network consumption by their customers. 

Cr. Minutes per day Airtel Jio
Voice on Network 821 963
YOY Growth 12.4% 19.6%

As you can see the total minutes spent by all of the customers of airtel on calls is 821 Crore Minutes while Jio stands at 963 Crore Minutes. Now if we divide the numbers by total customers we will get the consumption per customer and multiply by 30 to get the monthly data. 

Voice consumption per customer is given below:

Minutes/ Month Airtel Jio
Voice consumption per customer 965 771
YOY Growth 12.5% -6.3%

The decrease in the case of Jio is because of the same reason that they started charging their customers for calling the other sim card user.

Coming to wireless data consumption that is how much total Gb of data is used by all of the customers. 

GB in Cr Airtel Jio
Wireless data consumption 645 1284
YOY Growth 72.4% 34.3%

The 72.4% growth in data consumption with increase in ARPU is a good sign of the company and this is the major factor one should look at. Total consumption of airtel stands at 645 Crore Gb and jio stands at almost double than airtel which is 1,284 Crore Gb. Now let’s divide the number by the total customers to get the average usage of data per subscriber.

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GB/month Airtel Jio
Data consumption per customer 15 11.3
YOY growth 35.5% 3.7%

 Bharti airtel never gave free data like jio but still we can see that not many customers shifted to jio and the existing customers continued to use the airtel’s data like they used to. 

So these were the basic comparisons between Bharti Airtel and Reliance Jio. If you are looking forward to investing in any one of the companies then let me tell you that only bharti airtel is listed on stock exchanges so you can invest in it but not in Jio as it is not a listed company. Facebook, Vista equities, etc are investing in Jio but as a retail investor you cannot. But anyway it would be interesting to see the competition between these companies in upcoming years. 

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Meet Mehta
21 | Small & Mid Cap Investor | CFA L1 candidate | Blogger | Reader | Engineer | Life-Long Learner
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