Telecom tariffs still unsustainable: Airtel

Telco hopeful that ARPUs will rise

May 19, 2020 10:16 pm | Updated 10:49 pm IST - NEW DELHI

Gopal Vittal

Gopal Vittal

Even though the telecom industry has witnessed some ‘repairs’, more needs to be done on tariffs which are still ‘unsustainably low’, Gopal Vittal, MD and CEO, India & South Asia, Bharti Airtel said on Tuesday.

The company, which on Monday had posted a loss of ₹5,237 crore for the January-March 2020 quarter due to an exceptional charge on account of reassessment of statutory dues, is hopeful of achieving an average revenue per user (ARPU) of ₹200 in the short-term, as against ₹154 in the reported quarter. This is against an ARPU of ₹135 in the October-December 2012 period, and ₹123 in the year-ago quarter.

“We believe that an ARPU of ₹154 is inadequate to turn a reasonable Return on Capital as a company and remain hopeful that ARPU will get to ₹200 in the short term and eventually to ₹300 which is where it should be for a business like ours. Of course, even at this level of ARPU, we believe, we will be very well-placed to serve all the lower end customers who may have the capacity to pay ₹100 or less,” Mr. Vittal said during a post-earning analysts call.

He added that while there would be some growth in ARPU because of the upgradation from 2G to 4G, “our tariffs are still unsustainably low”.

“The industry is very keen to have TRAI intervene in putting together a set of floor prices... all the responses have gone to TRAI and they haven’t taken a decision right now given the circumstances around COVID-19, but I do believe that this needs to get corrected sooner rather than later,” he said.

The private telecom operators raised tariffs by up to 40% in December 2019.

Mr. Vittal added that the company’s overall capex for this year was expected to “be more moderated” than that of last year. Bharti Airtel on Monday had said during FY20, its capex investment stood at ₹25,359 crore to ensure superior customer experience besides front ending some investment to ensure seamless services during the ongoing pandemic. Of this ₹11,339 crore capex was for the January-March 2020 quarter.

Mr. Vittal added that the company saw strong traction for home broadband services.

“We’ve seen a rapid surge in the need for home broadband... in Q4, we had about 63,000 net additions, which is one of the higher numbers that we’ve seen in many quarters, and even during the lockdown there has been a lot of demand for actually getting home broadband going,” he said.

Airtel’s ARPU from home broadband service also increased to ₹803 from ₹787 in the previous quarter. However, on y-o-y, the ARPU was lower from ₹815 in January-March 2019 quarter.

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