BackAirtel plans pan-India 5G coverage by Mar ‘24
Airtel will front load its capital expenditure plans to prioritise the 5G rollout
PremiumNEW DELHI : Bharti Airtel will launch its 5G services later this month, and is looking to cover 5,000 towns and cities by March 2024, Gopal Vittal, the company’s chief executive officer and managing director, said in an analysts call on Tuesday. India’s second largest telecom company reported a five-fold jump in net profit in the June quarter.
“We intend to launch 5G immediately, extending to a pan-India rollout very soon. By March 2024, we believe we will be able to cover every town and key rural areas. Detailed network rollout plans for 5,000 towns are completely in place. This will be one of the biggest roll-outs in our history," Vittal told analysts and investors.
Airtel will front load its capital expenditure plans to prioritise the 5G rollout. It will be funded via internal cash flow. “The rapid rollout will see advanced capex on an India basis," Vittal said. The three-year capex will remain at present levels. For FY22, Airtel’s capex was ₹25,661 crore, up from ₹24,168 crore in the year ago. “Operating cash flow is strong enough to find any requirement for capex." The telco’s operating cash flow for FY22 was ₹32,448 crore, up from ₹21,970 crore in FY21.
While debt may increase on paper, the annual payouts of ₹3,600 crore to the government will ensure the debt quality was healthy, Vittal said in reply to a question on rising debt levels after the purchase of spectrum worth ₹43,040 crore at the auctions. Airtel will decide on the timing of raising the second tranche of the rights issue in two months, group director Harjeet Kohli said. It raised ₹5,247 crore in the first tranche of its ₹21,000-crore rights issue in October 2021.
Globally, 5G did not lead to incremental growth in ARPU, or average revenue per user, and Airtel is yet to decide on the pricing of 5G plans, Vittal said. However, he said, tariff of existing plans must be raised. In Q1, the carrier’s ARPU rose to ₹183, the highest among rivals. “We are confident that we will see ARPU of ₹200 and eventually ₹300 from tariff rises."
Vittal refuted claims that the carrier did not have adequate spectrum for offering 5G services, or the likelihood of it buying 700 Mhz airwaves in the next auction.
According to Vittal, Airtel has strategically bought the largest pool of mid band spectrum—30 Mhz in four circles and 20 or above in the rest—which is adequate for world-class 5G experience without having to buy the expensive 700 Mhz airwaves and setting up larger towers to propagate the network, which will need more power and, hence, more capital. “This is important to understand given the misconceptions about the 700 band and it being a panacea to everything. It is not. The band is absolutely no different from 850 or 900 in terms of propagation. All it does is provide coverage at the edge, deep indoor or in far-flung rural areas, and gives at best 4G like speeds. Nothing more."
“With this auction, we are fully confident that we will not be required to spend any amount on spectrum for many years," he added.
Airtel’s consolidated net profit rose 466% to ₹1,607 crore for the June quarter, from ₹284 crore last year, with revenues rising by over 22% to ₹32,805 crore. It added 4.5 million 4G customers in the quarter. The carrier with 362 million customers reported a rise in earnings before interest, tax, depreciation and amortisation by 26% from the year ago to ₹16,604 crore, with margins expanding by 1.5 percentage points to 50.6%.
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