Will pick up some 4G spectrum in Jan-Mar auctions, not 5G at these prices: Airtel CEO Gopal Vittal

Bharti Airtel chief executive Gopal Vittal expects the next airwaves sale around January-March 2021, in which India’s No 2 telco would only look to bolster its 4G spectrum holdings, but give 5G airwaves a miss if they are auctioned as the telco fe...

Bharti Airtel chief executive Gopal Vittal expects the next airwaves sale around January-March 2021, in which India’s No 2 telco would only look to bolster its 4G spectrum holdings, but give 5G airwaves a miss if they are auctioned as the telco feels the current reserve prices set by the sector regulator are unaffordable. “We gather from DoT (Department of Telecommunications) that a spectrum sale is likely during January-March next year, but in case 5G airwaves are sold, we can’t afford it at current reserve prices recommended by Trai as there would be no business case,” said Vittal. He added that Airtel though would bolster its stock of sub-Ghz spectrum that are ideal for indoor and rural coverage, and some capacity spectrum in 1800/2300 Mhz bands.

Vittal was speaking at an earnings call after Airtel shares zoomed nearly 13% intraday before closing 4.26% higher at Rs 451.45, in the afterglow of reporting solid fiscal second quarter results, underlined by sharply narrower consolidated losses, record quarterly revenue, rising average revenue per user (ARPU), expanding operating margins, strong 4G subscriber additions and robust data and voice usage, say analysts.

“Bharti's India mobile print shows marked improvement in many areas such as growth in total subs without ARPU dilution which shows quality of customer addition; lower churn rate increasing life-time value of customers and continued delivery of 4G net add, which has now likely matched the market leader (Read: Reliance Jio),” brokerage ICICI Securities said in a note. It added that the higher 4G subscriber base will enable the telco to better transfer tariff hike into ARPU, whenever such hike happens. Goldman Sachs added that data for the last 9-12 months suggests Airtel had largely closed the gap versus Jio on wireless revenue growth.


Vittal on Wednesday said Airtel isn’t keen to take the lead in raising tariffs as it risked losing its competitive edge, though it would be perfectly happy to immediately follow any other operator taking the lead. He, though, said Airtel could consider taking a lead on this score only if its competitors’ ARPU – a key performance metric – hovered close to the company’s in future. The telco added 13.9 million users that helped drive up ARPU to a three-year high of Rs 162, from Rs 157 in the June quarter.

Airtel’s CEO reiterated that tariffs were unsustainable and need to rise quickly to take ARPUs initially to the Rs 200 mark, and then to Rs 300. But he cautioned it was equally critical to assess “competitive readiness before taking a tariff hike,” which is why, “Airtel would prefer to follow up, if required on the same day, if another telco takes the lead”. Airtel had also sought clarifications from DoT on its adjusted gross revenue (AGR) payment terms, the top executive said, but declined to share specifics. The telco has paid over Rs 18,000 crore of its near Rs 44,000 crore AGR liabilities, and needs to pay the rest in annual instalments by March 31, 2031.

The Supreme Court asked telcos to pay 10% of their total dues by March 31, 2021. DoT has interpreted this to mean that telcos need to pay another 10% of their balance dues by March 2021. But Airtel and Vodafone Idea are of the view that they have already paid up more than 10% and need to make the next payment only by March 31, 2022. Vittal said the upcoming zero-interconnect usage charges (IUC) regime from January 2021 would have “no material impact” on revenue as all telcos are on an equal footing on this score. Trai had deferred implementing a zero-IUC regime to January 2021 from the earlier January 2020 deadline. At present, IUC is paid by the call-originating telco to the destination carrier.
ADVERTISEMENT
READ MORE
ADVERTISEMENT

READ MORE:

LOGIN & CLAIM

50 TIMESPOINTS

Related Companies

More from our Partners

Loading next story
Text Size:AAA
Success
This article has been saved

*

+