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30 August 2018

Bharti Airtel hits back against RJio with content deal

Indian mobile behemoth Bharti Airtel has inked a content deal with Zee Entertainment Enterprises, one of the country’s most exciting and progressive media firms. As our readers will be all too familiar with, any move by an operator in a market like India, no matter how seemingly insignificant on the surface, has the potential for irreversible impact on the Faultline – in Bharti Airtel’s case formed of almost 350m mobile subscribers.

Zee Entertainment, also known as ZEEL, will work alongside Bharti to develop over-the-top video originals to attract “hundreds of millions” of new subscribers onto their respective platforms with a three-year business plan. Users of the Airtel TV mobile app will get access to content from the free-to-use Zee5 streaming portal, including on-demand originals, as well as 37 extra live TV channels to add to Airtel TV’s current offering of 368 channels.

It’s a solid strategy to shore up against the new kid on the block, the disruptor Reliance Jio (RJio) which has now blasted through the 200m mobile subscriber mark. But will the efforts be enough to slow its growth in such a cut throat market? Take Vodafone, which is beginning to feel the effects of RJio’s stranglehold, losing 3m subscribers last quarter.

Saying that, Bharti Airtel has been swept up in a storm this week after clocking its lowest June subscriber addition figures to date, causing its stock price to tumble as RJio’s continued rise threatens to topple Bharti Airtel as the undisputed market leader. That was an addition of 10.7m subscribers by the way, according to telecom industry body COAI, which in one month in India counts as well below par, considering Bharti Airtel picked up 36m subscribers in the previous month – although this was primarily due to finishing its meal of rival telco Telenor India.

Back to video, most recent figures show Airtel TV at just 14m subscribers as of September 2017, meaning only some 4% of its mobile subscriber base are signed up – worryingly low for a free TV Everywhere service and poor by Bharti Airtel’s standards. Big change is coming though, as the Airtel TV app will only be free for existing customers until December 2018 – a big risk we feel but in a country with such low ARPU it might prove crucial as Bharti Airtel’s margins come under increasing scrutiny.

The app is currently available as part of the Infinity mobile plan for a little over $7 a month, as well as with broadband packages, and comes with a year’s subscription to Amazon Prime. A full subscription, including Prime Video, only costs $14 a year in India (or $7 at the current promotional offer) but is expected to increase sharply soon.

Jio meanwhile, has now upped its mobile TV channels from 300 to 575 with 60 in HD, boasting that subscribers use some 11GB or 12GB a month in video data. User figures for the JioTV app are not public.

So what came of Ditto TV, the live and catch-up OTT TV service launched by Zee New Media in 2012? It took Ditto TV only one year to reach 1m subscribers and in February 2018 the service was integrated with the new Zee5 service. Ditto TV used a multiscreen system from Siemens Compact Monitoring Technology (CMT) and we hope for the sake of the joint venture this technology has been upgraded since, with no evidence suggesting so.

These growth figures bode well for boosting video consumption at Bharti Airtel and Zee5, although Ditto TV was made available worldwide, a legacy which does not appear to have lived on in Zee5, so 100m users in one year might be a stretch.

Zee Entertainment lost an important part of its business when it decided to sell Ten Sports Network to Sony Pictures Networks India for $385m two years ago, which broadcasts channels across India, the Maldives, Singapore, Hong Kong, the Middle East, and the Caribbean. This would be cause for concern had Bharti Airtel not already have sports rights nailed down – crucially cricket, the big Indian sport.

Bharti Airtel also offers a broadband TV and movies service for a monthly fee of $3.53, and recently announced plans to spend $8.6bn over the next three years to upgrade its fixed and mobile networks under its new Project Leap program. The program will see Bharti doubling the footprint of its mobile network, with a particular focus on urban LTE, WiFi and rural expansion. These network upgrades are fundamental to the success of OTT video in India – as highlighted by a quick browse over consumer reviews of Airtel TV and similar services.

Bharti will also deploy a FTTH network and will harness a combination of fiber, small cells and WiFi to improve indoor coverage. This is very poor in many parts of India and limits the operator’s ability to offer premium services, especially to enterprises. The poor internet connections in the country have meant India’s homegrown on-demand platforms such as Hotstar, Big Flix and Spuul, have suffered.

Zee5 CEO Tarun Katial said: “Over the next three years, curated video content produced by ZEEL, including TV shows, original series and movies will be available exclusively on Airtel’s digital properties like Airtel TV, in addition to ZEE’s digital platform, Zee5. This will enable Airtel’s mobile and home broadband customers to enjoy a superior and differentiated content experience.”

It’s worth noting that the Airtel TV service is operated under Bharti Airtel’s DTH arm Bharti Telemedia, which US private equity firm Warburg Pincus bought a 20% stake in for $350m back in December.