Substantial rise in mobile tariffs needed in India: Airtel CEO Gopal Vittal

Hints at multiple tariff hikes, says free 5G data dragging down Arpu

Bharti Airtel on Wednesday hinted at substantial tariff hikes, saying that call charges in India were at an “absurdly low level” compared to other parts of the world, and that the domestic market was ready to absorb it.

Bharti Airtel CEO Gopal Vittal called for “tariff repair” to improve return ratios.  

“The return that the industry really needs is predicated on tariff repair, this is really the heart of the problem that we have today, our pricing and tariffs are at an absurdly low level relative to any other part of the world. So, tariff repair is needed for return ratios to improve... it doesn’t matter which technology it comes from,” Vittal said during the company’s post-result analyst call.

Vittal also said that subscribers were using almost double the data they would have used because of the access to free 5G data.

Airtel reported its fourth quarter earnings numbers on Tuesday. Its average revenue per user (Arpu) improved to Rs 209, from Rs 193 in Q4 FY23.

“We are above Rs 200 in Average Revenue Per User (Arpu), but even at Rs 300, the Arpu would be one of the lowest in the world,” Vittal said.

But on a sequential basis, Arpu rose marginally, rising from Rs 208 in the preceding quarter.

While Airtel has already raised entry-level tariffs over the past two quarters, more is needed, Vittal said. “The upside benefit of tariff repair is much better than some consolidation at the lower end,” he said.

He hinted the market would be able to absorb a series of tariff hikes.

Vittal pointed out that entry-level smartphone prices have again reduced after witnessing a major rise a few quarters ago due to the global shortage in semiconductor chips. As a result, smartphone shipments have risen.

Overall, Airtel’s healthy revenue earning customer addition is a function of the telco’s 5G rollout, Vittal stressed.

5G data

Airtel had 72 million 5G customers at the end of March. The company said it is seeing a growth of 2-2.5 million 5G users every month.

The free data provided with 5G plans is dragging down Arpu, Vittal said.

“Given that users have access to free 5G data, they are now using almost double the data they would have used had it been priced,” Vittal said.

While overall 5G continues to face headwinds against monetisation, Vittal said the company will be focussing on fixed wireless access (FWA) in the coming quarters. He stressed customer premises equipment is now available in 25 cities.

Vittal also said the full impact of Airtel’s FWA push will be felt by the second quarter, and that the telco is moving towards a standalone deployment in these cities.

ALSO READ: Bharti Airtel Q4FY24 results: Net profit drops 31% to Rs 2,071 crore

Capex plans

Vittal said the telco would continue to invest in capital transport infrastructure due to the growth of data.

“We are looking at a host of acquisitions in the B2B area,” Vittal said. Wireless capex will see a moderation given the already large scope of the 5G rollout so far, he added.

The current rollout of 5G will cover the rural areas countrywide, but urban areas would need more towers, the CEO said.

The telco incurred large one-time capital expenditure in Q4, towards establishing data centres, and for submarine cables, Airtel management said.