Even though some stability has returned to the telecom sector, which now has three private operators, and the slide in tariffs has stopped, Bharti Airtel feels that prices need to improve in the long term for the sector’s viability.
The company has been able to improve its average revenue per user (ARPU) per month to `123 for the Q4 of FY19 on the back of introduction of minimum recharge plans and also increase in some other prepaid packs.
In the preceding quarter, the ARPU stood at `104. Airtel has also changed its postpaid and broadband plans as a measure to improve revenues.
“Prices are not coming down anymore but still its a brutal marketplace. Two years back, our ARPU was about `200 and now its `123… prices need to improve in the long term,” Gopal Vittal, MD and CEO, India and South Asia, said during an analysts call. Airtel’s mobile revenues grew 4% in the back of the ARPU improvement after the company launched minimum recharge plans.
Asked about the capex guidance for FY20, Vittal did not share a number but said it could be lower as the peak capex cycle has been over. The consolidated capex for FY19 stood at `28,742 crore, majority of which was utilised in wireless operations in India.
Asked if capex will increase in case of 5G spectrum auction taking place in next 12 months, Vittal said prices proposed by the Telecom Regulatory Authority of India (Trai) are exorbitant and the company cannot afford to pay the price. “These prices we can’t afford and we hope the government bring down prices of spectrum and we will look forward to that,” Vittal said.
He added that a mobile operator has to spend anywhere between `50,000 and `55,000 crore for buying about 100 MHz of 5G spectrum.
Bharti Airtel has reported a surprise consolidated net profit of Rs 107.2 crore during the January-March quarter, up 24.36% compared to the preceding quarter, on the back of a one-time gain of `2,022 crore.
Incumbent operators like Bharti Airtel and Vodafone Idea have been facing competitive pressure from Reliance Jio for last several quarters and the telcos have been making various efforts to get back into good health. To improve profitability, the operators last year decided to weed out low revenue-paying subscribers by making it compulsory for everybody to do a minimum recharge of `35 per month.
