Tariffs unsustainably low, more needs to be done, says Bharti Airtel CEO

Bharti Airtel on Tuesday said that while the telecom industry has seen some bit of repair, tariffs continue to be “unsustainably low”, as it exhorted the sector regulator to address the floor price issue “sooner than later”.

In an earnings’ call, Bharti Airtel CEO, India and South Asia, Gopal Vittal, said although the company is by-and-large comfortable with its spectrum holding and has the required headroom, it is keen to have sub-GHz footprint across the country to plug some gaps.

Airtel had, on Monday, reported Q4 loss at Rs 5,237 crore, mainly on account of provisioning for paying statutory dues, while its full year losses ballooned to a record Rs 32,183 crore.

Vittal said the industry has witnessed some repair but emphasised that more needs to be done on tariffs, which are still unsustainably low. “We believe that an ARPU (Average Reveue Per User) of Rs 154 is inadequate to turn a reasonable Return on Capital as a company and remain hopeful that ARPUs will get to Rs 200 in the short term and eventually to Rs 300 which is where it should be for a business like ours. Of course, even at this level of ARPU we believe, we will be very well placed to serve all the lower end customers who may have the capacity to pay Rs 100 or less,” he said.

The company said that the full impact of the tariff hike undertaken in December 2019 came through in its entirety with no downtrading.

“While there will be some growth on ARPU on secular basis because of upgrade from 2G to 4G, we have maintained that tariffs are still unsustainably low. The industry is very keen to have telecom regulator intervene in pulling together...floor prices...I think all responses have gone to Trai and right now they have not taken a decision given circumstances around Covid-19. But I do believe this needs to be corrected sooner rather than later,” Vittal said.

He said the coronavirus pandemic had thrown up a ‘mixed bag’ over the past 45-50 days. He noted that while demand for home broadband and new services like collaboration tools surged as people worked-from-home, on the flip side there were significant pressure at the lower end such as marginal customers using feature phones who had to struggle to recharge, for which the company activated several channels and initiatives.

"It is a rapidly evolving situation. Every day is getting back to little bit more normalcy," he said.

On whether Airtel is also looking to morph into tech/digital platform instead of a telco with partnerships, in the backdrop of Jio-Facebook and other such deals, Vittal said, "technology is at the heart of our strategy and we leverage the power of tech".

"...Are we a tech company, yes...are we a telco, yes...are we trying to marry telco along with technology, that can solve problems for customers and partners, and create value for the ecosystem, that is what we are trying to do," he said.

Asked if the company is comfortably placed on spectrum holding given the rising data usage and upgrades from 2G to 4G, Vittal said Airtel has a lot of headroom to use existing spectrum.

"...we have also made it clear that we would love to have a sub GHz footprint across the country. This is one gap that we have in our portfolio particularly in our challenger markets in the West and markets like Kerala, UP (West) and Haryana...these are places where sub GHz spectrum will give us much propagation, deep indoors (coverage) and particularly in rural areas...to cover larger geographies and expand axis of Airtel network," he said.