The contribution of digital businesses to Bharti Airtel’s overall revenues is currently small, around Rs 3,000 crore annually, but it is growing at a fast rate.
Bharti Airtel will look at listing its fintech arm, Airtel Payments Bank (APB) as part of its strategy to monetise its digital service offerings, a company executive in the know of developments told FE. However, the exact timing hasn’t been finalised yet, he added.
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Though Airtel has several other digital businesses relating to advertising, cybersecurity, cloud for small and medium enterprises, and communication platforms as a service (CpaaS), the executive said that these cannot be monetised on the lines of the payments bank because they are intertwined with the mobility business.
According to him, the only other digital business, after the payments, which can be monetised is the data centres but that would take years.
The contribution of digital businesses to Bharti Airtel’s overall revenues is currently small, around Rs 3,000 crore annually, but it is growing at a fast rate, he stated.
The payments bank has 50 million users, and has a gross merchandise value of Rs 20,000 crore and is a profitable business, so it makes sense to list it at some stage, he stated. In FY22, Airtel Payments Bank reported a profit of Rs 9 crore on revenues of Rs 941 crore. It had posted losses of Rs 464 crore in FY20 and Rs 434 crore in FY21.
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Currently, Bharti Airtel holds 70% in Airtel Payments Bank while the remaining 30% is held by its parent Bharti Enterprises.
Airtel Payments Bank was among the first of 11 players — only six are operational now — to receive a payments bank licence from the Reserve Bank of India, in 2016.
Initially, Bharti and Kotak Mahindra Bank had formed an 80:20 joint venture for the payments bank. However, last year, Kotak Mahindra Bank sold its holding to Bharti Enterprises for around Rs 300 crore. Last year, Bharti also received approval from RBI and the Foreign Investment Promotion Board to increase foreign direct investment in the payments bank arm up to 74%.
Industry analysts said that payment banks are high-volume, low-margin businesses and that’s the reason some of the players who had got licences initially exited. Apart from Airtel, the other players who continue to operate are, Paytm Payments Bank, India Post Payments Bank, Fino Payments Bank, Jio Payments Bank, and NSDL Payments Bank.
Of these, Airtel and Jio have the advantage of leveraging the network of retailers and neighbourhood stores because of their telecom business. India Post’s payment bank has enabled post offices to provide payment bank services, while Fino has managed to spread its network through a partnership with Bharat Petroleum to use their outlets as digital banking centres.
Payment banks can offer small savings account facility of up to `2 lakh, bill payment, Aadhar Enabled Payment System, and remittance services to the unbanked. Mobile operators have an advantage in these areas because of their user base which can easily be tapped into utilising these services. These banks can take deposits but they are not allowed to directly lend. Instead, they have tie-ups with non-banking finance firms, insurance firms, and mutual fund companies to cross-sell and up-sell various financial products.
