Two giants of Telecom, one of the fastest growing industries in India, one of the fastest growing economies in the word, are Airtel and Reliance Communication. Airtel declared its yearly results on April 29th followed by Reliance Communication on April 30th. Both the results are very good with Airteldoing better than RCom probably.
• Airtel has a net profit of Rs 7,859 crores vs RCom had a net profit of Rs 6,147 crores for the year 2008-09.
• For Q4, Airtel made a net profit of Rs 2,049 crores vs RCom had Rs 1,516 crores.
• Overall the verdict in the newspapers has been that Airtel has come out as a big winner!
In the statements made by Airtel they have explained their strategy going forward. They are giving importance to rural penetration and high end users. Now this is an interesting strategy by a company like Airtel, which is looking for growth in customer base and generating revenues through the existing userbase as well. By emphasizing rural markets they are paving way for the future, expanding their network throughout the country further and gearing up for the next wave of users. In the last quarter they added 8 million subscribers. In the cities they are dropping the unviable schemes offering free minutes to users, allowing competition to grab these users but instead are focusing on their core stengths, their high end users! They already have a huge userbase and now they are generating the profits from them. A very good strategy indeed!
Reliance on the other hand seems slightly on a different track. They completed the world’s largest network rollout ahead of schedule, according to Anil Ambani. They also spent $2 billion creating a GSM network in major cities. They gave out lots of free minutes to users to create an existing userbase, which Airtel said they discontinued. Reliance is cutting down on Capital Expenditure since it already has the network and