Airtel's data user base expected to reach 129 million by FY17: CLSA

Bharti Airtel's mobile data users are expected to increase over 2.4 times to 129 million in the next three years, says a report.

At the end of December 2013, the company had 54 million data customers, global brokerage firm CLSA said in a report on Bharti Airtel.

India's broadband penetration is only 2%, while that of mobiles is a vast 72% (893 million subscribers) and rising, it said.

"Bharti, the nation's top mobile operator, is taking the lead in data ramp-up and, with the largest network and highest spectrum, we expect its mobile-data subscribers to jump 2.4x to 129 million by FY17," it added.

The report said that as the absence of last mile connectivity led to India skipping the fixed-line phase and moving to 893 million mobile phones over the past decade, the market is now set to leapfrog from PC-based fixed line Internet access and adopt mobile data.

It added that mobile data ramp-up along with an upturn in voice revenue per minute should drive a 5% annual improvement in average revenue per user (ARPU) of Airtel.

"A threefold jump in data revenue will account for 50% of Bharti's incremental mobile revenue over FY14-17 CL (cumulative)," it said.

The report said India's smartphone penetration of 12% is still very low compared to other countries but the market is seeing an expanding range of affordable as well as high-end devices.

CLSA said that as per industry data, smartphone shipments in India have grown at 180% year-on-year to 15.1 million during the October-December quarter, with one in every five phones sold being a smartphone.

"Leading mobile handset manufacturers are sensing this growth opportunity in the affordable smartphone market and have lined up multiple offerings in the $80-$300 price range," it added.

CLSA said mobile data should grow with rising smartphone penetration, a large target market and diverse data plans and falling tariffs cutting across economic, demographic and regional (urban versus rural) classes.

It said Airtel with 201 million subscribers, is well- poised to take the lead in the data ramp-up.

"The company is best placed with incumbency advantage and existing subscriber base," it said.