Home >Companies >People >Bharti Airtel CEO Gopal Vittal indicates another round of tariff hike

Bharti Airtel Ltd chief executive officer Gopal Vittal on Thursday hinted at another tariff hike, stressing that the telecom company’s average revenue per user (Arpu) needs to move to 200, and eventually to 300 per month, for a sustainable business model. Vittal, however, did not specify the timeline for hike in calls and data tariffs.

He was speaking at an analysts’ call a day after the telco reported a loss of 15,933 crore for the June quarter owing to the provisions of 11,746 crore rupees made for statutory dues. Airtel’s Arpu in the recently concluded quarter was 157, up from 154 in January-March. The company had hiked tariffs by up to 42% in December.

The company’s chief financial officer (CFO) Badal Bagri said the provision made for adjusted gross revenue (AGR) related dues should be considered “full and final". The company also said its liquidity position is comfortable, implying no challenges in paying off AGR dues.

The department of telecommunications (DoT) estimated Airtel’s dues at around 43,780 crore, of which the telco has already paid 18,000 to the government.

“We have taken an incremental provision…This is full and final because, as per the (Supreme Court) order, this (the dues) cannot be challenged, recalculated or reassessed," Bagri said.

The company, however, hopes the dues are to be paid over a time, said Harjeet Kohli, director finance, Bharti Airtel. “Financing wise, it (fundraising for clearing AGR dues) is not really necessary. We have cash on the books. There are no liquidity access issues and there is no immediate need to add to the payment provisions," Kohli added.

The Supreme Court is yet to pronounce its order over staggered payments of AGR dues. CEO Vittal declined any comment on the AGR matter as the order is reserved. Rivals Vodafone Idea Ltd and Airtel have requested for a 15-year payment window.

Vittal pointed out that the fundamental issue with 5G is the cost of spectrum, which “is way over the top for any kind of business model to work. The cost of spectrum needs to come down and the ecosystem needs to evolve," he said.

“We have always maintained that the indicative reserve price on the spectrum of 5G, the 3.5 GHz band, are very very expensive and we will not be able to afford it at those levels. Secondly, the ecosystem for 5G is very nascent," Vittal said.

He said the commercial roll out of 5G is still a few years away, while rival Mukesh Ambani recently announced that his company Reliance Jio has readied indigenous 5G solutions and can start trials as soon as spectrum is made available.

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