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May 15, 2024

“Airtel CEO Calls for Substantial Rise in Mobile Tariffs in India to Improve Revenue”

In a bid to boost revenue and align with global standards, Bharti Airtel’s chief executive officer, Gopal Vittal, emphasized the necessity of a substantial rise in mobile tariffs in India. Speaking at Airtel’s post-result analyst call, Vittal stated that the market is ripe for such increases, which could gradually be absorbed over time.

Despite Bharti Airtel reporting an Average Revenue Per User (ARPU) of Rs 209 in the fourth quarter of the financial year 24, up from Rs 193 in the same period of the previous year, Vittal highlighted that even at Rs 300, the ARPU would remain one of the lowest globally. Although there was a marginal sequential rise in ARPU from Rs 208 in the preceding quarter, Vittal stressed that tariff repair is essential across the industry.

Acknowledging Airtel’s efforts in raising entry-level tariffs over the past two quarters, Vittal noted the necessity for further increases, suggesting that the benefits of tariff repair outweigh any consolidation at the lower end of the market. He expressed confidence that the market could absorb multiple tariff hikes, pointing out that entry-level smartphone prices have decreased again after a previous rise due to semiconductor chip shortages, leading to increased smartphone shipments.

Vittal emphasized that Airtel’s healthy revenue-earning customer additions are a direct result of the telco’s 5G rollout. With 72 million 5G customers at the end of March and a growth rate of 2-2.5 million new 5G users every month, Vittal pointed out that the provision of free data with 5G plans has impacted ARPU negatively. He explained that if this data were priced in, data usage would likely decrease. Despite challenges in monetizing 5G, Airtel plans to focus on fixed wireless access (FWA) in the coming quarters, with customer premises equipment now available in 25 cities. Vittal indicated that the full impact of Airtel’s FWA push would be felt by the second quarter, with the company moving towards standalone deployment in these cities.

Regarding capital expenditure (capex) plans, Vittal stated that Airtel would continue to invest in capital transport infrastructure, especially due to the growth of data. More investments are also expected in the enterprise and data center businesses, with a particular focus on the Homes business, which is set to see an increase. Vittal mentioned that Airtel is considering various acquisitions in the B2B sector. While wireless capex will see moderation given the extensive 5G rollout, Vittal highlighted the need for more towers in urban areas to complement the current rollout covering rural areas nationwide. The telco incurred significant one-time capital expenditure in the fourth quarter for establishing data centers and submarine cables.

In conclusion, Vittal’s call for higher mobile tariffs reflects Airtel’s strategic direction towards revenue enhancement and continued investment in infrastructure to meet the evolving demands of India’s telecom market.

Jhumpa Lahiri

Jhumpa Lahiri

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