Pandemic may delay 5G rollout in India, says Airtel CEO

The roll-out of fifth generation, or 5G, wireless service in India could be delayed by a few months because of the covid-19 pandemic, said Gopal Vittal, managing director and chief executive officer, Bharti Airtel Ltd. He added that the launch of the next-generation technology could be deferred to the next financial year.

“We were earlier under the impression that the 5G auction could happen by December. With the pandemic that has hit us, my sense is that the 5G rollout may get delayed by a few months. Whether this happens this fiscal or the next is something to be seen,” Vittal said while addressing analysts in a post-earnings conference call on Tuesday.

In January, Bharti Airtel tested 5G on a live network in Hyderabad and said its network was fully ready for a commercial launch. While India’s second largest operator by market share claims to be ready for a 5G launch, the government has expressed its intent to roll out the service by the end of this calendar year or in early 2022.

According to a arliamentary panel report of 8 February, department of telecommunications (DoT) secretary Anshu Prakash said 5G will be rolled out in a phased manner, that too where demand justifies investments. There is no clarity on when the government will conduct spectrum auction for 5G services.

Vittal said there is massive headroom for the growth of average revenue per user (Arpu) in the coming quarters. Vittal, in a post-earnings call earlier, had said the telco aims to reach an Arpu of ₹200 in the medium term and to ₹300 eventually.

During the March quarter, the company’s Arpu fell to ₹145 from ₹166 in October-December as the interconnect usage charge (IUC) regime, which contributes 7-8% in revenues across the telecom industry, ended on 1 January. However, the telco’s Arpu increased from ₹135 in the March quarter of fiscal year 2020.

“While this Arpu is the highest in the industry, it also shows the massive headroom for Arpu growth. I say this for two reasons. One is the very low level of tariffs in India. The second is the fact that we have 140 million users on our network who are not on 4G and whose Arpu is less than half that of the average of the business as a whole,” he said.

Vittal said the company’s balance sheet has improved due to an optimal capital structure and well-timed fundraising. Airtel’s new corporate structure, under which the telecom business has been hived off into a separate entity, while the digital assets have been merged with the parent, will allow the telco to sharpen its focus on digital assets, he said.

Denying speculation of promoter stake sale, Vittal said, “I just want to emphatically state that both the Bharti family as well as SingTel have absolutely no intention of any stake sell down or block sale. This is speculative. There is no intention whatsoever."

The Bharti family and Singapore Telecommunications Ltd (SingTel) hold 24% and 32%, respectively, in Bharti Telecom Ltd, the holding company of Bharti Airtel. Bharti Telecom owns 35.80% stake in Airtel, according to information on the BSE.