Airtel Ads is beginning to clock meaningful revenues: Gopal Vittal

Bharti Airtel MD and CEO Vittal was speaking to analysts during the company's earnings call

e4m by exchange4media Staff
Published: Jun 30, 2021 9:52 AM  | 6 min read

Telecom major Bharti Airtel's ad tech business Airtel Ads has worked with over 100 brands in the beta phase itself and has begun to clock meaningful revenues, Bharti Airtel MD & CEO, India & South Asia Gopal Vittal said during the company's earnings call recently. He also said that Airtel Ads allows brands of all sizes to curate consent-based and privacy safe campaigns.

Airtel had entered the ad-tech industry with Airtel Ads in February. The ad-tech platform enables brands to engage with over 32 crore Airtel customers. During the beta phase, the ad-tech platforms ran successful campaigns with over 100 brands including PepsiCo, Zomato, CRED, Tata AIG, Apollo 247, Lenskart, Cars24, Gameskraft, and Harley-Davidson.

By entering the digital advertising business, Airtel Ads will compete with ad tech platforms like Google, Facebook, Amazon DSP, Flipkart Ads, and Paytm Ads. According to Dentsu-exchange4media report titled 'Digital Advertising in India 2021', the digital advertising industry has grown by 15.3% to reach Rs. 15,782 crore by the end of 2020. Further, digital media is expected to grow at 20% to reach a market size of Rs. 18,938 crore by 2021 and with a CAGR of 22.47% to reach Rs. 23,673 crore by 2022.

"This quarter, we also launched Airtel Ads. Airtel Ads is a brand engagement solution that allows brands of all sizes to curate consent-based and privacy safe campaigns to one of the biggest pools of quality customers in India. This is a massive and growing market. In the Beta phase itself, we have worked with over 100 brands and are beginning to clock meaningful revenues," Vittal told analysts during the conference call. He also said that the company is monetising 200+ million digital users using advertising.

DTH business

Vittal also said that the company's direct to home (DTH) business Airtel Digital TV has become the clear number 2 player in the market. "In DTH business, we have now become a clear Number 2 in the market. From a revenue market share of about 22 percent in December 2018 we are now at 27 percent share in December 2020. We have in fact outpaced all other players in terms of performance consistently over the last 8 quarters."

During the quarter, Airtel acquired a Warburg Pincus affiliate’s 20% equity stake in its DTH arm Bharti Telemedia for a total consideration of Rs 3126 crore which will be discharged primarily via issuance of  36.47 million equity shares of Airtel at a price of Rs 600 per share and up to Rs 1037.8 crore in cash. With this acquisition, Airtel has got back the full ownership of the DTH business.

"With full ownership of the DTH entity, we have even more flexibility to drive this business. As a result, we have now combined our large Mobility distribution system with DTH to create one Mass Retail Channel which will drive all businesses – Mobile, DTH and the Payments bank. This should give a fillip to our DTH business," he stated.

While conceding that the DTH business did see softness in subscriber addition, Vittal noted that the company has added 1.2 million new subscribers in the last three financial years. "Yes, we did see a softness in the customer base in Q4, but we had a strong recovery in April, so I would discount that a little bit and I would look at it as saying what was it in full year 2019, full year 2020, and full year 2021. We had 1.2 million users that we added in FY2019, we added another 1.2 million FY2020, and we added close to 1.2 million - 1.1 million in FY2021, so the underlying trajectory is not a source of concern."

He further stated that the challenge for DTH is due to regulatory reasons which is now fixed. A lot of the growth for DTH has to come from new users and this is Airtel has integrated the channel across both mass retail and the direct to the customer. "We were expecting to have a really very, very solid quarter one, but then the lockdown hit us. I sense that some of these capabilities on the One Airtel plan, as well as the mass retail integration, give a very strong upside for DTH to gain share from cable and expand its presence."

Speaking about its digital services like Airtel Xtreme (video OTT) and Wynk Music, Vittal said that the company has reached a significant milestone at 200 million MAUs. Wynk has 72.5 million, while Airtel Xstream has 37.5 million. And Airtel Thanks has 96.3 million MAUs respectively

"As I have said before, we have a 3 pronged digital flywheel. First, it allows us to get more efficient and deliver a better omni-channel experience on the core business. Second, it allows us to build new revenue streams on our core foundational strengths of Data, Payments, Distribution and Network. Finally, it allows us to create an ecosystem of powerful partnerships that leverage these foundational strengths. A quick word on two of our digital businesses," Vittal added.

 Broadband business

Speaking about the home broadband business, Vittal said that the telco has over 3 million subscribers. He also mentioned that the company is expanding its broadband footprint by entering new towns and cities. He also said that the company's partnership with local cable operators (LCOs) has helped it to add 1 million+ new home passes.

"The Broadband business has grown to 3mn+ customers on the back of strong demand for home broadband. During the quarter, we expanded our footprint rapidly to new towns and cities through our unique LCO partnership model, adding 1mn+ home passes. We are now present in 200+ cities. As a result, our net adds this quarter at 274K have been the highest ever," Vittal informed.

 Bharti Airtel CFO - India & South Asia Badal Bagri said that the company has to incur 25-30% less Capex in reaching last-mile customers through LCO network. "On home passes, the differential between what the LCO does and what we do will be close to around 25% to 30% from a capex perspective, differential cost of production, they undertake capex which we share partially, but overall on the cost of delivering this will be close to 25%."

Vittal expects Airtel to achieve a broadband home pass of 20-25 million in the next couple of years with the combination of our own rollout as well as the LCO rollout.



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