“Jio’s aggressive push toward home broadband may pose only a limited threat to Bharti, given the segment’s single-digit contribution to the latter’s consolidated numbers,” Motilal Oswal said in a note.
The home services business contributed less than 3% to Airtel’s consolidated revenues in the September quarter, FY21.
The brokerage, though, reckons Jio’s market aggression could spur Airtel to spruce up its home broadband offerings and intensify competition in the wired broadband space, especially as the latter’s products and network capability are at par with Jio, and also with demand for home broadband solutions surging as vast swathes of India Inc continuing working from home, amid Covid.
Motilal Oswal said Bharti has already followed Jio by launching a lower price-plan at Rs 499, though still at a premium to the telecom market leader, especially at a time when consumer awareness and demand for home broadband solutions is picking up, with changing data needs, post-Covid lockdowns.
The brokerage, in fact, expects Jio to intensify competition in the home broadband space, but sees Bharti riding the wave as “its products and network capability are at par”.
According to Motilal Oswal, India’s home broadband market, estimated at a modest $2 billion (Rs 15,000 crore approx), has remained highly under-penetrated for years due to a combination of weak wired infrastructure, execution woes, high investment needs and regulatory challenges, that has led to the substitution of wireless data consumption.
India’s $2-billion home broadband market, it said, accounts for a paltry “9% share of the country’s Rs 1.7 trillion wireless market”, adding that wired broadband subscriber growth too had been modest in the last five years, with annual compounded annual growth rate (CAGR) of just 5%.
The brokerage, though, said that smaller wired broadband players had increased market share during the lockdowns to 43.2% in August 2020 from 40.5% in April 2020.
This, it said, is since smaller players have a regional presence (in metros such as Delhi and Mumbai), and contain many local cable operators (LCOs), who provide home broadband along with cable services. “Unlike larger players, these target low ARPU-paying customers and offer pure data connectivity services, and also lower speeds due to copper-based connectivity and thus the price-points are lower,” said Motilal Oswal in a note.