Airtel earmarks Rs25,000 crore capex in FY18 for 4G network expansion
Bharti Airtel CFO Nilanjan Roy says the telecom firm has hiked its capex forecast for the year by Rs5,000 crore for expanding and strengthening its 4G network
New Delhi: Telecom major Bharti Airtel Ltd on Thursday said that it will invest Rs25,000 crore in expanding and strengthening its 4G network during the ongoing fiscal year instead of Rs20,000 crore announced earlier.
“Considering the data explosion in India...to accelerate our 4G rollout in terms of coverage and also build additional capacities in existing geographies...our capex forecast for the year is being upped from initial guidance of Rs20,000 crore to Rs25,000 crore,” Bharti Airtel chief financial officer Nilanjan Roy said during an earnings call on Thursday.
Airtel also said that it is likely to shut down its 3G network in 3-4 years and reframe the spectrum linked with it for 4G services. “There is almost no spent that we are doing on 3G. Our view is in next 3-4 years we are likely to see 3G network actually shut down faster than 2G network because there are still 50% of phone being shipped out in India that are feature phones,” Gopal Vittal, managing director and chief executive officer (India and South Asia) for Bharti Airtel, said during earnings call.
Vittal said that Airtel is investing in 4G technology to build more data capacity in the network. The company will use 2100 MHz band, which is used for 3G services, for 4G services. “Where we have the second career of 3G or third career then through flip of software you get incremental capacity on 3G. Most of that spectrum will finally go towards 4G for which we will need to have radio units,” Vittal said.
He said that in some telecom circles the company has installed modern 3G equipment which can support 4G services but the initially deployed equipments for 3G services will need to be replaced. “Some of the older radios are pure 3G which we need to replace. It will take its time. I think that the answer for that will be function of how fast pick up of voice happens on VoLTE (4G voice call network). The moment that happens voice will not be required to be carried on 3G which can help refarm us 2100 Mhz for 4G,” Vittal said.
On Tuesday, Airtel posted fourth straight quarter of drop in earnings as its consolidated net profit plunged 76.5% to Rs343 crore for the September quarter compared to Rs1,461 crore it registered in the same period a year ago. However, it recorded four-fold growth in the mobile data traffic during the reported quarter in India, and its mobile broadband customers rose by 33.6% to 55.2 million. An Airtel representative on the call said that revenues will be further hit to the tune of 4% of its consolidated EBITDA or around Rs300 crore in the ongoing quarter due to the reduction in mobile call connection charges to 6 paise applicable from 1 October.
Mobile companies charged 14 paise a minute for allowing a domestic call from a rival operator to terminate on their network before 1 October. The Telecom Regulatory Authority of India (Trai), the body which determines it, has made it 6 paise per minute from 1 October.
Airtel’s consolidated revenue for the September quarter stood at Rs21,777 crore, a 10.4% drop on an underlying basis when adjusted for revenue from Africa and Bangladesh operations. In a separate development, Airtel announced the transfer of its optical fibre business to its wholly-owned subsidiary Telesonic Networks for a valuation of up to Rs5,650 crore.
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