Airtel to reduce spectrum budget for future auctions, says MD Gopal Vittal

Gopal Vittal, managing director of Bharti Airtel, said the telecom firm had 40 million home passes, and was rolling out 1.5 million home passes every quarter. (Mint)
Gopal Vittal, managing director of Bharti Airtel, said the telecom firm had 40 million home passes, and was rolling out 1.5 million home passes every quarter. (Mint)

Summary

  • The telco reported a 38% drop in net profit to 1,341 crore for the quarter ended 30 Sep

Bharti Airtel will be spending much less on the upcoming spectrum auctions and subsequent sales over the next couple of years, as it does not require additional airwaves, but will renew spectrum in a few circles, managing director Gopal Vittal said during the earnings call on Wednesday.

“I would not imagine that the company needs further spectrum for some time to come. The only place where some small chunks of spectrum may be needed is renewable spectrum in three or four circles, but it is a function of the traffic pattern. How much do we need? Do we need it at all? Those discussions are still underway."

The top executive of the Sunil Mittal-promoted carrier said that a strategy for the upcoming auctions will be in place once they're announced. The government intends to hold the next spectrum sale by March 2024.

Vittal said capital expenditure on 4G and 5G, which has been advanced significantly in FY24, will moderate starting FY25 as a majority of its rollout will be completed by March. “The real place where capex will cool off will be around radio and, therefore, you should see a capex moderation in the coming year."

Vittal said capex on data centres, home broadband and transport will remain at elevated levels.

Airtel will adopt a strategy to deploy its fixed wireless equipment outside the premises and not inside since it had received feedback following the beta FWA services launch that the quality of service drops when 5G is not available in a specific place.

“We’ve decided to go with outdoors. That will be launched in the coming months. We will replace the orders. We are in the process of working through several issues around the appropriate digital journeys, training our people and so on," he added.

FWA services will be available at the same price as broadband provided over fibre since it will be a complimentary service to fibre, which gives guaranteed speeds and will be deployed wherever fibre is not available.

“FWA will be a complement to fibre for two reasons. One, the pricing is the same, and the second, of course, the addressable market will not suddenly reach 200 million homes because that many homes will not be able to afford to spend 1,000 a month on telecom expenses," said Vittal. Airtel had 40 million home passes and was rolling out 1.5 million home passes every quarter, he added.

While overall tariffs should rise, the carrier will not charge more for 5G, said Vittal. The No. 2 carrier launched 5G services in October 2022 and has over 50 million customers. 5G services are priced at the same levels as 4G.

“Tariffs are very low in India, both the average revenue per user as well as rate per GB. If you plot both on two axes, then we are right at the bottom on both ... The question is not whether it will happen but when it will happen. We’ve seen two rounds of tariff increase since the launch of Reliance Jio, and we hope it will happen again at some stage, not in the distant future."

More applications have to be on 5G since the use case has so far been only higher speeds, and monetisation use cases for 5G are yet to be developed in India and globally, he said.

“Except for some private 5G networks, and specific B2B (business-to-business) use cases, which have modest revenue streams associated with it, the fundamental use cases for 5G are still not there."

Bharti Airtel reported a 38% drop in net profit to 1,341 crore for the quarter ended 30 September, from a year ago, dragged by one-time tax and interest provisioning of 1,619 crore following a Supreme Court ruling that telcos could not treat licence fee as an expense.

Vittal said the calculations were done by the company and verified by auditors. On filing a curative petition on calculating adjusted gross revenues and errors therein, Vittal said the company was awaiting clarity on whether the petition would be heard by the apex court.

For the September quarter, the telco posted revenues of 37,044 crore, up 7.3% from a year ago, backed by strong and consistent performance in its India operations. Its quarterly revenue was at 26,995 crore, up 10.9% from the year-ago period.

Mobile services revenues from India operations were up 11%, led by 4G and 5G customer additions of 27.2 million year-on-year and 7.7 million sequentially, making up 71.8% of its overall mobile customer base of 342 million.

Average revenue per user or ARPU, a key metric of profitability, reached 203 per month, up 6.9% on-year and from 200 in the June quarter.

The Sunil Mittal-promoted carrier said it had added 1 million postpaid customers in the September quarter, the highest ever for the company.

Catch all the Corporate news and Updates on Live Mint. Download The Mint News App to get Daily Market Updates & Live Business News.
more

MINT SPECIALS

Switch to the Mint app for fast and personalized news - Get App