Early signs from tariff hikes are encouraging and its full impact will be felt in the next two quarters, Airtel Managing Director Gopal Vittal said on Tuesday in the post results call with analysts.
“This (tariff hike) was much needed for the financial health of the industry. The early signs from this repayment are encouraging, with the full flow through is expected in the next two quarters. I need to underscore that the industry needs a minimum Rs 300 ARPU for long term sustainable investments, and respectable return ratios,” Vittal stressed.
Airtel and Jio had raised tariffs by up to 25 per cent in the first week of July.
The telecom major reported a sharp 158 per cent year-on-year (Y-o-Y) jump in its net profit for first quarter (April-June) of financial year 2024-25 (Q1FY25) on Monday.
Vittal also said that Airtel’s 5G consumer base has risen to 90 million at the end of the first quarter, up from 72 million at Q4FY24-end.
Rival Reliance Jio has announced its subscriber base has expanded to 130 million at June-end.
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“5G shipments continue to grow, and we continue to gain market share,” Vittal told analysts.
Vittal said Airtel’s latest growth in quarterly Average Revenue Per User (ARPU) to Rs 211 in Q1 is being driven by ongoing transitions from smartphone to feature phones, and from prepaid to postpaid upgrade, as well as higher data monetisation, and rising international roaming penetration.
However, he admitted that Airtel has seen some SIM consolidation at the lower end of the market, particularly around the 2G user base in the early weeks after the tariff hike came into effect.
During the quarter, Airtel fully prepaid the advance payment dues for the 2012 and 2015 auctions.
“In the last one year, we have prepaid Rs 24,250 crores of high cost spectrum dues. In recognition of our efforts, Crisil has upgraded our debt rating from AA+ to AA+ positive,” Vittal said.
Standalone 5G play
Airtel’s recent foray into the Standalone (SA) mode of 5G will ensure faster uplink and downlink performance in domestic FWA, Vittal said.
In the SA mode, the network is built only on 5G, while in the NSA mode, the 5G network is built as a top-up on an existing layer of the 4G and 3G radio network.
Till now, Jio has been offering 5G through SA technology, while Airtel has been using Non Standalone (NSA)-based networks.
“We are planning to go live with SA technology for FWA within Q2. It should be noted our core, transport and radio networks are all SA-ready,” Vittal said.
Home broadband & postpaid
The telco is focussing on its Homes business, where it is targeting the expansion of fixed wireless access (FWA) to the top 60 million households in the country which account for 35 per cent of industry revenues.
“Of these, broadband penetration is only about 40 million. To address this opportunity, we are expanding our WiFi penetrability,” Vittal said.
Airtel’s Wi-Fi service, encompassing both FWA and Fiber to the Home (FTTH), is now available in 1300 cities. The bulk of the broadband market is located in the top 1000 cities, and Airtel gained 3.5 lakh customers in the segment in Q1.
In the premium postpaid category, Vittal said Airtel believes that up to 80 million existing prepaid customers can make a transition to postpaid. The telco has added 4.9 million postpaid customers in the last six months, or more than a quarter of total customer acquisitions, he said. The rural, and B2B segments remain other key focus areas.