Bharti Airtel’s selling and distribution costs to be four times Jio’s this fiscal
Bharti Airtel’s selling and distribution (S&D) costs are nearly four times higher than Reliance Jio’s as the Sunil Mittal-led telecom operator’s premium branding and pricing strategy are vital for acquiring and retaining high-value customers as well as sustaining its 12% higher average revenue per user (ARPU) than the telecom market leader, said analysts.
As per company data and CLSA estimates, Bharti Airtel’s S&D expenses are 8% of revenue compared to Jio’s 2%. The global brokerage estimates Bharti Airtel’s S&D and associated costs will hit Rs 15,200 crore in 2023-24, four times higher than Jio’s estimated Rs 3,800 crore.
“Bharti’s higher S&D spend and branding efforts are key as its premium branding helps sustain premium ARPU and improve market share,” CLSA said.
This, it said, is because India’s second-largest telco follows a unified strategy for all its services under the Airtel flagship brand, which has resulted in quality advantages.
Branding is seen as critical for operators to retain the best subscribers and sustain growth.
Jio’s S&D spends are significantly lower than Bharti Airtel’s as it benefits from group company Reliance Retail’s infrastructure, in-house media properties for advertising and lower spends on marketing and branding, said analysts.
They added that Reliance’s retail presence too is growing across consumption baskets, including consumer electronics, and going forward, the group’s retail business would increasingly be key to Jio’s ecosystem of digital services.
Analysts, though, said that despite a lower number of data users, Bharti Airtel’s ARPU at Rs 203 (in July-September) was 12% higher than Jio’s Rs 182. Between 2019-20 and the second quarter of 2023-24, Bharti Airtel’s ARPU increased
