Bharti Airtel is working on strategies with which it can make subscribers migrate to a tariff pack higher than they are currently in. This way, the average revenue per user (Arpu) would also rise and the company would not have to bank on headline tariff hikes.
According to a company executive, while Airtel has raised tariffs twice in 2021 and once in 2019, along with other industry players, it cannot continue to do the same in isolation. “Raising revenues through headline tariff hikes has its own limitations. One has to wait till the time the industry is prepared for it. Doing it in isolation impacts the company adversely,” the executive said.
He added that an alternate way of raising revenues is by trying to shift subscribers from 2G to 4G, prepaid to postpaid, and making postpaid customers buy all of Airtel’s services such as broadband, direct-to-home, etc.
In the top bracket, the company has about 50 million users.
“When Airtel’s 2G customers switch to 4G, they double Arpu. Similarly, when a prepaid customer moves to postpaid, Arpu further doubles and when a postpaid customer buys all home services-broadband etc, the Arpu quadruples. There is a lot of business that can come from these upgrades,” the executive explained.
As part of the above strategy, the company is also slowly raising its entry-level tariff in select circles. For instance, it recently increased the price of its minimum recharge for 28-day tariff plan by about 57% to Rs 155 in Haryana and Odisha. According to company officials, the response to the pilot run of the new tariff has been good and the churn has been much lower than expected. By February, the company will take a call on extending this strategy to some other circles.
Bharti Airtel’s Arpu stood at Rs 190 for the July-September 2022 quarter, the best in the industry. Its Arpu during the same quarter a year ago was Rs 153.
The company is also looking at increasing revenues through similar strategies in the enterprise segment from new business verticals around cloud services, cybersecurity, communications platform-as-a-service etc, which it estimates to be a Rs 50,000-crore market.
“The 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 Rs 50,000 crore. These are things like communications platforms as a service (CPaas), cybersecurity and cloud. These are things where we are putting in a lot of energy,” the executive said.
Currently, 80% of the company’s enterprise segment revenue comes from 20% of the customers. Airtel is now working to reach out to new customers with an entire suite of offerings, including solutions for adjacency services.
“With our focus adjacencies, we will reach out to customers who are with us but not availing cloud, cybersecurity, CPaas services. We will also go to those enterprises who are not with us with an entire suite of solutions. There are massive growth opportunities in the enterprise. We will use 5G as one of the products to reach out to enterprises,” the executive added.
As reported earlier, Bharti Airtel has become the first telecom operator to roll out a private 5G-based network for an enterprise in the country. The company has deployed a 5G-based captive private network at Mahindra and Mahindra’s Chakan automobile manufacturing plant in partnership with IT firm Tech Mahindra.
On capex, Bharti has plans to invest Rs 27,000-28,000 crore in telecom network with a focus on 5G rollout. While it is planning to increase capex by 10-15%, it has no plans to charge a premium rate for 5G services as it has not worked in several countries that tried to do so. “Airtel’s capex will be in line with that spent in the last three years. It may go up and down because of the faster rollout of 5G — around Rs 27,000-28,000 crore. We may see an upsurge in one year and gradually moderate around the same level,” the executive said.
The company earlier had an annual average capex in the range of Rs 24,000-25,000 crore.
The telco has ruled out buying spectrum in the premium 700 MHz band, which its rival Jio acquired in the auction held in July. It has sufficient spectrum in the 850 and 900 MHz bands, which it would refarm to 5G once these services take off in a big way and become a norm.