The CEO says that the next price hike would happen after the current sim consolidation eases, triggered by tariff hikes in July and November 2021.
Gopal Vital, CEO of Bharti Airtel, said he expects another tariff hike in 2022, depending upon competitive dynamics and subscriber growth. The tariff hike is essential for a sustainable business model, but it would be distressing for the consumers.Â
The CEO said that Airtel wouldn’t hesitate in leading the next wave of tariff hikes in the country, which is considered inevitable, but he also said that it wouldn’t happen in the next 3 to 4 months. Since the prepaid plans have doubled by Rs99, the SIM consolidation will continue through January – March. This trend is expected to become moderate by the first quarter of the fiscal year.Â
Airtel targets to boost the average revenue per user (ARPU) to Rs 200 in 2022. He also mentioned that if ARPUs settle higher at the Rs 300 level, telecoms like Airtel will make “respectable 15% plus returns” on capital employed.Â
After a round of price hikes, consumers reconsider their preferred telecom brands and explore more options. This causes a sharp decline in the number of mobile SIM cards in the market.
Vital said that 20 – 25% of SIM consolidation had already happened, and more was expected. He also credited the comparatively slow pace of 4G net subscriber additions to SIM consolidation.
During this quarter, the company added 3 million subscribers of net 4G, less than half of what the company acquired during the previous quarter.Â
The CEO explained the flat data usage per subscriber by saying, “People cannot use more than 17 or 18 GB of data in a month. Also, now schools, offices, etc., are opening, so the spurt in the bandwidth consumption because of lockdown is also going down.”Â
He mentioned that the subscribers were already consuming over four-hour screen time daily.
He explained,
“I’m glad to see it has moderated now as this means a lesser capital expenditure for us. Previously it was also increasing because of increasing allowances we were giving to subscribers.”
Allowances are defined as the extra GBs given to users with their plans.Â
Recently, top telecoms of India have urged the Telecom Authority of India (TRAI) to slash the starting prices of airwaves reserved for 5G by up to 95% (from the previously recommended rate).
This is being done to provide the necessary financial headroom to splurge dollars in these capital-intensive, next-gen wireless broadband networks. TRAI is yet to finalize its 5G spectrum pricing, and the auction is expected to happen by May- June.Â
Vital said that the pace of 5G adoption would only happen by FY24 from a consumer standpoint as the country’s installed base of 5G devices constituted only 3-4% of overall smart devices.
The CEO added,
“A factor in determining where to deploy 5G technology would be to put it in places where no further investment in 4G is required.”Â
He even called for more accessible 5G spectrum payment terms in the upcoming sale. He urged the sector regulator to pay attention to the telecom industry’s call for a sharp cut in spectrum reserve prices.
He said,
“We hope the regulator will recommend more considerate payment terms for the upcoming 5G spectrum auction and ring in a dramatic reduction in the reserve prices as Airtel won’t be able to afford the (5G spectrum) prices set; in the last auction.”Â
At last, the CEO added about the tariff hikes, “We will be aggressive at driving upgradations.
At the same time, we will do it sensibly. Getting into a subsidy kind of game is not a great idea in a market like India, actually in any market. We do see a significant increase in ARPU when people move from feature to smartphone.”
Published By – Pawan Rajput
Edited By – Mahi Gupta
