BackBharti Airtel considers raising tariffs across India by February
Bharti Airtel is expected to spend ₹27,000-28,000 crore as it advances some capex on rolling out a 5G telecom network in FY23.
PremiumBharti Airtel has seen less than expected customer churn following the baseline correction of Bharti Airtel saw lower-than-anticipated customer churn after raising the lowest prepaid tariffs by ₹56 in Odisha and Haryana, and the company may implement similar increases in other telecom circles by February following a deeper assessment of how consumers will react to the new tariffs, a top executive said. “We thought we would see an elevated level of churn or SIM consolidation, but the churn is much lower than what we thought it would be. The pilot is still ongoing. We will have the full data by February. If it all works, then we will assess when to roll it out (to other circles)," the executive said, asking not to be named. SIM consolidation refers to people using more than one SIMs to discard the additional ones.
Airtel raised the lowest tariff from ₹99 to ₹155 for prepaid customers in the two circles of Haryana and Odisha last month, the first such change in tariff structure in the past several years, even as wireless operators raised the highest prepaid tariffs by 20-25% last year.
Bharti Airtel is expected to spend ₹27,000-28,000 crore as it advances some capex on rolling out a 5G telecom network in FY23. The company’s annual average capex has been about ₹24,000-25,000 crore in the past and will come back to this level in the coming financial years.
The executive said that Airtel would not charge a premium for 5G tariffs as the move has not found acceptance globally. The person said that the next wave of revenue growth is set to come from the transition of 200-250 million feature phone users to smartphones, or 4G, and upgrading postpaid users to home pass or broadband users, which itself was an underpenetrated segment with only 50 million homes. The strategy could lead to a quadrupling of average revenue per user, or ARPU, a key metric of profitability, which stands at ₹190 as of the quarter ended September. He added that the opportunity to convert prepaid users to postpaid was very strong since the tariff differential between prepaid and postpaid had reduced to 1:1.6 from 1: 3.5 or 4 when 4G prices crashed in 2016, which in turn would lead to a doubling of ARPU. “Also, the operator with a reasonable amount of postpaid doesn’t have 5G, and I think that can be a trigger to actually win share," he added, referring to Vodafone Idea.
Airtel is also looking at increasing revenue from new business verticals around cloud services, cyber security, communications platform-as-a-service etc., which it estimates to be a ₹50,000 crore market.
“Airtel enterprise business is very strong. The opportunities are massive. We play in the ₹45,000 crore market, but there is an adjacent market which is ₹50,000 crore. These are things like communications platforms as a service, cyber security, and cloud," he added.
The executive added that the carrier might not hive off the digital businesses that were driving revenues of about ₹3,000 crore into separate units but will look at the public listing of the Airtel Payments Bank, which was a profitable entity with 50 million users and ₹20,000 crore of the gross merchandise value.
Airtel is expanding its 5G coverage across the country but will not need to buy the 700MHz band in the near future as it will refarm the 4G spectrum in existing bands to 5G, the executive added, backing the non-standalone or NSA architecture. The pricier 700MHz airwaves are being used by its rival and market leader, Reliance Jio, to offer 5G services on standalone or SA architecture.
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