Data, unlike voice, requires significant investments in networks and marginal players/GSM new entrants (holding c20% revenue market share) already seem to be finding it tough to compete in data opportunity given stretched balance sheets. The ability to invest in data allows Bharti to drive consolidation and improve revenue market share in our view. Increases in capex investments are in line with our estimates and we expect this to be positive for the company.
Airtel has announced Project Leap, a plan to enhance its network and replace legacy equipment with an investment of Rs600 bn by FY19. Under this project, Bharti will deploy 160,000 additional base stations, over 300,000 km of fibre, wi-fi hotspots, small cells and indoor solutions. Airtel will have 264k 3G/4G base transceiver stations by FY20. Focus is to expand 3G/4G network. It plans to deploy 70k base stations in FY16. Out of these, only ~16k have been deployed in 1HFY16 so 2H is likely to see a meaningful acceleration. The company claims that 60% of its network will be 3G/4G enabled by Mar-16.
Airtel also plans to replace its legacy network. While this will lead to installation of more efficient equipment, we also believe that a
major portion of this would anyways had to be replaced as ~100k of its current ~150k 2G sites were installed before Mar-10. By FY20, we estimate Idea, Vodafone and Jio to have 163k, 189k and 237k 3G/4G BTS respectively. However, we forecast Jio to lead in the number connected by optical fibre, with more than 200,000 by FY20.
While Jio?s upcoming launch is one of the reasons behind the capex acceleration, industry checks indicate Jio?s voice options are still not
comparable with the incumbents. With few VoLTE enabled headsets available, Jio is likely depend more on VOIP/roaming arrangements for offering voice, where seamless switching has proven unreliable.
