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5G rollout to not affect capex profile: Airtel CEO Gopal Vittal

As you invest in 5G, you will stop investing in 4G because capacity creation will be done on 5G which will obviously be lower cost of producing a gigabyte, given that you have much higher spectrum in those bands, Vittal said

twitter-logoPTI | February 4, 2021 | Updated 23:22 IST
As you invest in 5G, you will stop investing in 4G because capacity creation will be done on 5G which will obviously be lower cost of producing a gigabyte, given that you have much higher spectrum in those bands, Vittal said
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Speaking at an investor call after announcement of a strong set of Q3 numbers by Bharti Airtel, Vittal said the company has always been of the view that device subsidy game per se is value destructive, especially at the lower end of the market.

To deal with strategies around device subsidy on smartphones by rivals, the company would deploy different levers to ensure it remains value accretive and competitive in the marketplace, he added. "As far as device subsidy on smartphones is concerned, we can't comment much on it till we know what it is about, but suffice to say we will deploy different levers. We have got a full plan in terms of how we can deal with it, to make sure we do it smartly, in a value accretive way and to make sure we continue to remain competitive in the marketplace," Vittal said.

Bharti Airtel - which recently declared that its network is 5G-ready - does not anticipate any major change in its capital expenditure profile with the advent of fifth-generation services. "We do not believe that with 5G introduction, whenever it comes, we are going to see any material change in Capex profile. As you invest in 5G, you will stop investing in 4G because capacity creation will be done on 5G which will obviously be lower cost of producing a gigabyte, given that you have much higher spectrum in those bands," Vittal said.

Asked about the company's spectrum strategy and spectrum renewal plans, Vittal emphasised that Bharti Airtel is keen to have a full footprint of sub-GHz spectrum across the country. This would be important for the company is offering customers enhanced indoor coverage as well as coverage in rural areas.

"There are many circles...where we don't have sub GHz spectrum, so we would love to have that. There are some renewals coming up on 1800 band, there is also some capacity spectrum available on 2300 band where we already got deployed equipment...a combination of capacity or renewal, we will look and balance it, and make sure we optimise what we do," Vittal said.

His comments came at a time when the government has set the ball rolling for the spectrum auction, in which radio waves valued at Rs 3.92 lakh crore will be put on the block. The auction in seven spectrum bands for mobile services - 700, 800, 900, 1800, 2100, 2300 and 2500MHz bands - is scheduled to start from March 1. "...the first thing we would love to have is a full footprint of sub GHz spectrum across the country," he said but declined to spell out the specifics of the company's spectrum auction strategy.

The company will shut down its copper infrastructure in a year or so, and only have Fibre to home. "We are...in the process of rapidly upgrading our legacy copper assets completely to Fibre," Vittal said terming it a "game-changing move".

On tariff hikes, the Airtel top honcho declined to comment on specific timing when rates would go up, saying it is a competitive issue and based on market dynamics. "I believe, we will be ready to take up tariffs if and when any player actually moves tariffs, given that we are already at a premium," he said.

Vittal maintained that the industry needs tariff hike to nudge the average realisation per user per month towards Rs 200 initially, and Rs 300 eventually. "We would love to see tariffs go up. This is obviously something that industry needs if ARPUs (Average Revenue Per User) have to go to Rs 200 and finally to Rs 300 which is something as an industry we deserve, in order to generate a reasonably good return on capital deployed...this is what would be required for the business model to succeed," Vittal said.

Bharti Airtel logged net profit of Rs 854 crore for the December quarter against Rs 1,035 crore loss a year ago, as the telco witnessed improved realisations and the strong customer additions. Airtel also posted its highest-ever consolidated quarterly revenue of Rs 26,518 crore in the third quarter of 2020-21, up 24.2 per cent over the year-ago period.

On Wednesday, the board of Bharti Airtel had approved fundraising plans of up to Rs 7,500 crore via debt instruments such as debentures and bonds, in one or more tranches. "Despite the unprecedented volatility that we have confronted through this year, we delivered another strong performance," Vittal said.

The company, which launched Airtel Secure and Airtel Cloud services last quarter, it is seeing substantial growth of order book in both these areas. "We will double down on this by ramping up hiring and capabilities," Vittal added.

Also Read: Bharti Airtel share hits all-time high post Q3 earnings

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