2G network continues to fetch substantial revenue for telecom firm, says Gopal Vittal
Bharti Airtel is in the process of phasing out 3G and plans to focus solely on 2G and 4G
NEW DELHI :
Bharti Airtel Ltd plans to keep its 2G networks operational since they continue to fetch substantial revenue, chief executive officer Gopal Vittal said, even as the telco has started shutting its 3G networks due to thinning revenue from them.
“Airtel has no plans to shut down its 2G network as substantial revenue is coming from 2G phone users even in circles like Delhi...also older devices do not have VoLTE (Voice over Long-Term Evolution) integration," Vittal said in a post-earnings call with analysts.
Voice over Long-Term Evolution (VoLTE) is a standard for high-speed wireless communication for mobile phones. In India, only Jio operates a pure 4G-VoLTE network. Airtel, India’s second-largest telecom operator by revenue, is in the process of phasing out 3G to focus solely on 2G and 4G. Vodafone Idea operates 2G, 3G and 4G networks.
“2G still has a runway for next few years...we plan to shut down 3G because the revenue from 3G devices was very insignificant; so we took that call," Vittal said.
In August this year, the company had said that it will shut down its 3G network across India’s 22 telecom circles by March 2020, and increase its focus on providing 4G services. The company started the process in July by shutting the 3G network in Kolkata, followed by the Haryana and Punjab circles. It, however, continues to provide 2G services for feature phone users.
This marks the first phase-out of 3G technology in India, which is now increasingly moving to 4G, triggered by the entry of 4G-only Reliance Jio in September 2016.
Vittal’s remarks on 2G come a week after Bharti Airtel told the Telecom Regulatory Authority of India (Trai) that it should not scrap interconnect usage charge (IUC) from next year, given that a chunk of India’s population is still on legacy networks.
“The projections by GSMA for India also predict that 12-13% of customers will continue to be on 2G handsets till 2025," Airtel said in its submissions to Trai last week.
Last month, Trai had floated a fresh consultation paper to see if there was a need to revise the date for scrapping IUC from 1 January 2020, given the continuing imbalance in inter-operator traffic.
Airtel and Vodafone Idea, which are battling shrinking revenue as they match Jio’s low tariffs, have welcomed Trai’s rethink.
Jio, however, said it believes this rethink to scrap IUC was unwarranted, arbitrary and anti-poor, and not only affects the credibility of the authority, but also sabotages the government’s Digital India mission.
IUC, at six paise per minute, is levied by mobile networks handling incoming calls from rival networks.
Scrapping IUC, or reducing it, would benefit Jio, which has more outgoing traffic than incoming calls.
Bharti Airtel and Vodafone Idea earn a portion of their revenue from IUC as their incoming traffic is higher than outgoing.
“Even after considering that 100% subscribers of new greenfield operator i.e. Jio are on 4G VoLTE, 56% of overall subscribers are on 2G/3G networks... Also, 78% of Vodafone Idea’s subscriber base is on 2G/3G despite 4G VoLTE offered by the company and also competition," Vodafone Idea said in its comments to Trai.
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