Airtel Vs. Jio 4 Point Analysis | Yadnya Investment Academy

Bharti Airtel & Reliance Jio are the 2 strong players in the Telecom Sector in India. Both the Telecom Giants have announced their Quarterly Results for Q4FY21. So, Which player performed well in this quarter? How was the Quarterly Result of the respective Companies? Know it all, in this 4-Point analysis blog.

Introduction:

The Telecom Sector of India currently comprises 3 players namely Reliance Jio, Bharti Airtel, and Vodafone Idea (Vi). Among these 3 players, Bharti Airtel & Reliance Jio are 2 strong players with a high market share and a great consumer base. Hence, there is a close competition between these 2 players to win the race, on the other hand, it is a matter of survival for Vi. So, who performed well between Reliance Jio & Bharti Airtel in the last quarter of FY21 and know which player outperformed in this quarter in this 4-point analysis which includes:

Bharti Airtel Vs. Reliance Jio- 4 Point Comparative Analysis

1) Q4FY21 Results:

i) Bharti Airtel:

• Revenue from Operations of Airtel has gone up by 12% YoY from Rs. 23,019 Cr. in Q4FY20 to Rs. 25,747 Cr. in Q4FY21. Sequentially, revenue has gone down by 3% from Rs. 26,518 Cr. in Q3FY21.
• EBITDA of the company stands at Rs. 12,583 Cr. in the quarter ended 31^st March 2021. The same has increased by 29% YoY and 3.3% QoQ. EBITDA of the company in Q4FY20 & Q3FY21 was Rs. 9,761 Cr. and 12,178 Cr. respectively.
• Just like growth in EBITDA of the company, the EBITDA margin of Airtel stood at 48.9% in Q4FY21, up by 6.5% YoY from 42.4% in Q4FY20. Quarter-on-Quarter, EBITDA Margin was up by 3% from 45.9% in Q3FY21. EBITDA Margin at 48.9% is quite strong and comparatively better than Reliance Jio.
• Further, the EBIT (Earnings Before Interest & Tax) of the company has gone up by a massive 75.5% YoY to Rs. 5,048 Cr. in Q4FY21 from Rs. 2,876 Cr. in Q4FY20. Sequentially, growth in EBIT is 8% from Rs. 4,665 Cr. in Q3FY21.
• Despite a great jump in EBIT, the EBIT Margin of Airtel is at 19.6% in Q4FY21 up by 7.1% YoY from 12.5% in Q4FY20. Other Costs like AGR Dues, etc. have greatly affected the EBIT Margins of the company.
• Moving ahead to the Finance Cost of the company, Bharti Airtel has a higher Finance Cost than its closest peer i.e., of 3,861 Cr. as of March 2021. Here, the positive thing for the company is the reduction in the Finance Cost of 7% YoY and 3% QoQ from Rs. 4,147 Cr. in Q4FY20 and Rs. 3,972 Cr. in Q3FY21.
• In terms of Profit Before Tax (PBT), Airtel is finally able to go on the profitability side on a year-on-year basis. Loss of the company on Q4FY20 was Rs. 469 Cr., which now stands at Rs. 1,581 in the quarter ended 31^st March 2021. Sequentially, it has grown by a significant 167% from Rs. 592 Cr.
• Net Profit (After Exceptional Items) for the Q4FY21 was Rs. 759 Cr. for the company. Previous year in the same quarter, there was a loss of Rs. 5,237 Cr. While QoQ has come down by 11% from Rs. 854 Cr. in Q3FY21.

ii) Jio:

• Reliance Jio has reported a downfall of 4% in its revenue from Rs. 19,475 Cr. in Q3FY21 to Rs. 18,278 Cr. in Q4FY21.
• EBITDA of Reliance Jio has also reported growth of 1% quarterly from Rs. 8,483 Cr. in Q3FY21 to Rs. 8,573 Cr. in Q4FY21.
• Similarly, the EBITDA margin of the company has gone up by 330 basis points to 46.9% in Q4FY21. EBITDA margin was 43.6% in Q3FY21.
• EBIT of the company has remained flat in Q4FY21 to Rs 5,509 Cr. in Q4FY21 against Rs. 5,531 Cr. in Q3FY21.
• Despite a flat change in EBIT of Jio, its EBIT Margin has remained at 30.1% in Q4FY21 against the 28.4% in Q3FY21.
• Reliance Jio comparatively has a much lower Finance Cost than Bharti Airtel of just Rs. 801 Cr. as of March 2021, down by 6% QoQ.
• In the case of Jio, PBT is much better than Airtel of Rs. 4,708 Cr. in Q4FY21 and same has grown by 0.6% QoQ from Rs. 4,680 Cr. in December Quarter of FY21.
• Lastly, Jio earned a net profit of Rs. 3,508 Cr. in the quarter ended 31^st March 2021, up by 0.5% from Rs. 3,489 Cr. from Q3FY21.

Bharti Airtel Vs. Reliance Jio- Q4FY21 Consolidated Results

2) Evaluating Balance sheet Strength -Debt/ Liability Comparison

• If we look at the Balance Sheet of Airtel, we find that the Debt of the company has increased by 19% YoY from Rs. 1,24,521 Cr. in the quarter ended 31^st March 2020 to Rs. 1,48,507 Cr. in the quarter ended 31^st March 2021.
• Sequentially, the Debt of Airtel has gone by 0.7% from Rs. 1,47,440 Cr. in December Quarter of FY21.
• Also, Airtel has recognized the AGR-related Liability on its Balance Sheet of Rs. 24,840 Cr. and Rs. 23,861 Cr. in Q3FY21 and Q4FY21 respectively.
• On the other hand, Reliance is a net-debt-free company and hence having a positive figure as well for the company.
• Reliance is having Cash & cash equivalent as of Mar’21 includes balance call towards Right Issue (Rs.39,843 Cr)

Bharti Airtel Vs. Reliance Jio- Evaluating Balance Sheet Strength

3) Comparative Analysis on Operating Parameters:

i) Overall Subscriber Base:

• Bharti Airtel is having a subscriber base of 32.14 Cr. as of March 2021, which has gone up from the levels of 28.37 Cr. in March 2020 to 29.37 Cr. in September 2020 and 30.79 Cr. in December 2020.
• In the March Quarter 2021, Airtel managed to add 1.34 Cr. new customers to their network.
• For Reliance Jio, the total Subscriber base is 42.62 Cr. as of March 2021 which has also increased quarter-on-quarter from 38.84 Cr. in March 2020 to 40.56 Cr. in June 2020, and 41.08 Cr. in December 2020.
• In terms of Net Subscriber Addition, Jio has beaten Airtel by adding 1.54 Cr. new subscribers to the network.

Bharti Airtel Vs. Reliance Jio- Overall Subscriber Base

ii) Monthly Churn Rate:

• In terms of Churn rate also, Reliance Jio has performed better than Bharti Airtel.
• The Monthly Churn Rate of Airtel is 2.2% as of March 2021, the same is 1.26% for Jio in the same period.
• Previous data for Churn Rate of Reliance Jio are as follows: 0.57% (March 2020), 0.46% (June 2020), 1.7% (September 2020), and 1.6% (December 2020).
• Previous data for the Churn Rate of Bharti Airtel are as follows: 2.6% (March 2020), 2.2% (June 2020), 1.7% (September 2020), and 1.9% (December 2020).
• Jio has successfully managed to reduce the churn rate QoQ:

a) Strong Sales Initiatives

b) Several Consumer-focused Services: Launch of 2021 JioPhone to cater to first-time internet user in India.

Bharti Airtel Vs. Reliance Jio- Monthly Churn Rate

iii) Prepaid as a % of Total Subscriber Base:

• Airtel is having 94.8% Prepaid Subscribers as a % of the Total Subscriber Base.
• The same data is not yet available for Reliance Jio.

iv) Average Revenue Per User- ARPU Rs./Per Month:

• The Average Revenue Per User (Including IUC Revenue) of Airtel has come down to Rs. 145 in March Quarter of FY21 from Rs. 166 in December 2020.
• While Average Revenue Per User for Jio is Rs. 138 as of March 2021. It has come down from Rs. 151 in December 2020.
• Mar-21 ARPU of both declined QoQ, dragged by removal of IUC charges (which becomes zero from January 1, 2021)
• Airtel outpaced Jio in ARPU on the back of the company’s focus on acquiring quality customers as well as up-gradation of existing customers to 4G, which directly reflects in its improved ARPU vs Jio.

Bharti Airtel Vs. Reliance Jio- ARPU (Rs./Month)

iv) Average Revenue Per User- ARPU Rs./Per Month- Without IUC (For Airtel):

• IUC is a charge that is paid by a telco to another operator when its customers make voice calls to subscribers of the rival network.
• These charges stood at 6 paise per minute
• With the gaining subscriber market share, Jio & Airtel was the Net Receiver of IUC, while Vodafone Idea was the Net Payer of IUC, as VI has been consistently losing market share
• Elimination of IUC from January 1, 2021, is Bad news for Jio & Airtel: Resulted in Loss of business-to-business IUC revenues for Jio & Airtel from other operators.
• In the case of Airtel, if IUC Charge is excluded, the ARPU has increased by 2 Rs. Which is a positive sign for the company.

Bharti Airtel Vs. Reliance Jio- ARPU Rs./Month- Excluding IUC (For Airtel)

v) Data Customer Base:

• Bharti Airtel has added 18.9 Cr. Data Customer Base of 18.9 Cr. in February 2021.
• Data Customers as a % of Total Subscriber Base is 58.7% for Airtel.
• 4G Data Subscriber Base is 17.9 Cr. for Bharti Airtel as of February 2021.
• All the above data are not yet available for Reliance Jio.

Bharti Airtel Vs. Reliance Jio- Data Customer Base

vi) Wireless Data Consumption and Per Capita Data Consumption:

• Airtel is having a Wireless Data Consumption of 920 Cr. GB, while the same is 1,668 Cr. GB for Reliance as of March 2021.
• Here also, Jio is having higher Total Wireless Data Consumption due to a higher subscriber base
• In the context of Per Capita Data Consumption, Airtel has performed well than Jio with 16.84 GB per month as of March 2021, same is 13.3 GB per month for Jio.
• Airtel outpaced Jio in terms of per capita Data consumption due to :

a) Quality customers

b) Robust growth momentum in up-gradation of customers to 4G

• Airtel is having a Strong Share of 4G net additions in the market
• 4G data customers increased by 31.5% YoY to 17.93 Cr, addition of 4.3 Cr 4G customers in FY21
• Strong 4G penetration: Almost 56% of total customer base (Mar-21)

Bharti Airtel Vs. Reliance Jio- Wireless Data Consumption & Per Capita Data Consumption

vii) Voice on Network & Per Capita Voice Consumption:

• As of March 2021, Airtel is having 997 Cr. Minutes per day of Voice on Network against 1,148 Cr. Minutes per day of Voice on Network of Jio.
• Jio outpaces Airtel in Total voice on Network due to higher subscriber base.
• In terms of Per Capita Consumption, Airtel is having 1,053 Minutes per month while the same is 823 minutes per month for Reliance Jio as of March 2021.
• Airtel is ahead of Jio in terms of per capita voice consumption due to higher voice usage per customer.

Bharti Airtel Vs. Reliance Jio- Voice on Network & Per Capita Voice Consumption

viii) Wired Broadband Customers:

• As of February 2021, Bharti Airtel is having 29.9 Lakh Wired Broadband Customer slightly higher than Reliance Jio, which is having 24.3 Lakh Wired Broadband Customers in the same period.

Bharti Airtel Vs. Reliance Jio- Wired Broadband Customers

4) Competitive Positioning in Telecom Industry:

i) New Subscriber Addition:

• Since July-20, Airtel is gaining the pace in New Subscribers Addition.
• Airtel has shown consistency in gaining customers from July till February 2021 and has been able to outscore the other major players like Jio and Vi.
• Reliance Jio has also performed well and surpassed Airtel in February 2021, while in other months, have added a decent number of subscribers
• The Churn in Vodafone Idea is switching to Airtel than Jio
• Vi has consistently lost their customer every month except for February 2021, where they have added 6.5 Lakh new customers.
• Thus, in terms of consistency & sustained growth momentum, Airtel is a way ahead of Jio in new subscribers addition

Bharti Airtel Vs. Reliance Jio- New Subscriber Addition

ii) Total Subscriber Base Market Share Trend:

• Strong growth momentum reported by Airtel Consistently Month-on-Month
• The total Subscriber Market Share of Airtel has gone up from 27.96% in July 2020 to 29.83% in February 2021.
• While the market share gain for Jio is constant at ~35.50%.
• In the case of Vi, there is continuous erosion in Marke share from 26.34% in July 2020 to 24.20% in February 2021.
• It is seen that Airtel has been successfully capturing the market share lost by Vodafone Idea.

Bharti Airtel Vs. Reliance Jio- Total Subscriber Base Market Share

iii) Latest Market Share:

• In terms of Total Subscribers Market Shares, Reliance Jio is the market leader with a 35.54% market share as of February 2021.
• Next to Jio is Airtel, with a 29.83% market share.
• Market share of Vi, BSNL, and MTNL in Total Subscribers are 24.20%, 10.14%, and 0.28% respectively.
• Now, considering the Active Subscribers Market Share of the players, here, Airtel is the leader with 34.6% market share.
• In Active Subscribers Market Share, the second position is acquired by Reliance Jio with a 33% market share.
• Market share of Vi, BSNL, and MTNL in Active Subscribers are 26.1%, 6.2%, and 0.1% respectively.

Bharti Airtel Vs. Reliance Jio- Latest Market Share

iv) % VLR Subscribers:

• VLR Stands for Visitor Location Register which is a key metric reflecting the actual number of subscribers actively using a mobile network (ie. Active Subscribers).
• Here, Airtel is having the highest 97.47% Active Wireless Subscribers (VLR) as a % of Total Wireless Subscribers.
• The same is 90.61% for Vodafone Idea and 78.16% for Reliance Jio as of Feb-21.
• Active Wireless Subscribers (VLR) as a % of Total Wireless Subscribers of BSNL & MTNL are 51.72% and 20.95% respectively.
• Whereas the Average Active Wireless Subscribers (VLR) as a % of Total Wireless Subscribers of Industry is 84.09%.

Bharti Airtel Vs. Reliance Jio- % VLR Subscribers- Airtel Vs. Jio Vs. Vi

Conclusion:

Looking at the certain parameters and data, it seems that there might be a duopoly of Reliance Jio and Bharti Airtel in the Telecom Sector of India from a long-term viewpoint. The Telecom Industry has gone through several changes in the past as well as now also and these 2 big players- Airtel and Jio are responding very efficiently and effectively to these changes and making their base strong. Do consult with Financial Advisors before making any Investment Decision.