Airtel, India’s second largest wireless operator, believes an industry-wide tariff hike is needed, and that it is weighing taking the lead. However, if competition doesn’t follow, then it would be a challenge, the management said in the analyst call. Hence the Bharti management continues to be on the “wait and watch mode” for right timing.
More takeaways from the conference call:
- Every time there is a tariff increase in the telecom industry, a modest SIM consolidation happens, but the upside benefit of repair is much greater, according to management. ARPUs (Average Revenue Per User) will not likely rise from Rs200 to 300 in one shot but over a couple of rounds.
- Bharti Airtel would continue its network rollout of an additional 25,000 sites in the coming quarters. The company expects moderation in consolidated capital expenditure from FY24 levels.
- Management stated that capital will continue to be allocated in transport infrastructure, and the company will continue to invest in its enterprise and data center business. While wireless radio-side investments will moderate, the homes segment will continue to receive a step up in investment. The company is also exploring potential bolt-on acquisitions in the B2B area.
- Bharti Airtel’s Fixed Wireless Access (FWA) service is currently available in 25 cities, and the company is looking to streamline customer journeys, aiming to be at scale in the coming 8 weeks. Management re-emphasized that FWA (using standalone mode on 5G) would only complement Fiber-to-the-Home (FTTH) services, with a focus on areas with weak fiber connectivity.
- 5G device shipments continue to grow steadily, and Bharti Airtel is gaining a fair share, which is reflected in the growing 5G subscriber base. As of March 2024, Bharti’s 5G base stood at 72 million, growing at a rate of 2-2.5 million per month. For the homes business, management said that the top 60 million homes contribute around 35% of industry revenues, and of these, broadband penetration is over 40 million. To capture this opportunity, Bharti Airtel’s strategy continues to be expanding fiber presence, driving penetration of converged offers, building stickiness by leveraging digital targeting capabilities, and leveraging FWA. Year-on-year increase in smartphone shipments, large-scale network rollout in rural areas, and network experience efforts have been the major factors contributing to Bharti Airtel’s benefits of net subscriber additions and lower churn rates.