Airtel Payments Bank revenue may be $1 billion by 2030
By Team Startupcity | Monday, 25 April 2022, 04:00 Hrs
Airtel Payments Bank, a unit of Bharti Airtel, is estimated to generate $1 billion (around Rs 7,650 crore) in annual revenue by 2030 on the back of an estimated 10-fold jump in its gross transactions value (GTV) and a sharp rise in its monthly transacting user base, say analysts.
Airtel Payments Bank (APB), which turned profitable in the September quarter of FY22, currently has a revenue of Rs 1,000 crore on an annualised basis.
“Bharti has found a way to generate profit in Indian fintech, and we model Airtel Payments Bank rising to $1 billion of revenue by 2030,” London-based telecoms research firm New Street said in a note, adding that APB's current worth (read: valuation) is estimated at around $3.5 billion.
The estimated revenue jump, it said, is based on Airtel Payment Bank’s GTV growing from 0.7% of Indian GDP now to 2.8% over time, its current base of 32 million (monthly) revenue generating users rising to 200 million by 2030 and its average revenue per user (ARPU) growing 3% annually.
Airtel Payments Bank’s GTV was at Rs 1.5 lakh-crore ($20 billion) on an annualised basis in the December quarter, FY22.
CLSA said “Airtel Payment Bank’s revenue/ARPU is not consolidated with Bharti as per RBI’s mandate despite 100% ownership, but Bharti may look to unlock value of this successful digital pivot”. Airtel Payments Bank is 70% owned by Airtel and 30% by Bharti Enterprises.
The global brokerage added that "APB’s edge versus competition is led by the access and reach of Bharti’s 184 million unique users across digital assets and India’s largest B2B app for retailers”.
Analysts say APB’s immediate focus is three-fold: it aims to become the largest bank for an estimated 500 million-odd financially under-banked Indians, sharpening its B2B focus by enabling digitisation of small-ticket cash transactions, such as food deliveries, and facilitating digital payments (read: bill payments) for tech-savvy urban customers.
Industry experts see strong revenue generation potential for APB in the B2B space by way of cash management services, especially as its take rate at 0.8% is the highest in the payments banking space. The take rate is a metric to measure conversion of GTV into revenue.
CLSA, though, said that among the six operating payment banks, “APB has the third-largest customer deposits base at Rs 6 billion (Rs 600 crore), behind PayTM, which has the highest at Rs 34.5 billion (Rs 3,450 crore) followed by India Post Payments Bank at Rs 8.6 billion (Rs 860 crore)”.
Senior company executives recently told ET that APB plans to double its countrywide network of business correspondents (BCs) to 1 million and drive monetisation through a combination of transactions and interest-based income, besides boosting revenue from cash management services in the B2B space.
The immediate goal is to gain necessary reach to cater to the remittances market and the Aadhaar-enabled payment services business to serve millions of potential subscribers in the tier-3 and beyond markets.
CLSA said Airtel’s payments banking arm now has “a 16% share in domestic remittances, 7% in Aadhaar-enabled payment systems, is also the fourth-largest Fastag issuer, and has 2.6 million financial products cross-sold”.