New Delhi: Bharti Airtel CEO Gopal Vittal on Wednesday wished better days for rival Vodafone Idea, saying the company’s existence is critical for India to remain a three-private player market that could bring investments, prevent job losses and restore the reputation of the struggling industry.
“I think Vodafone Idea will remain and I wish it thrives… it is important that India remains a three-player market as that is good from all perspectives, (as in), investments, jobs and reputation,” Vittal said on a post-earnings call
Airtel reported a consolidated net loss of Rs 1,035 crore in the December quarter, stung by one-time expenses relating to statutory dues and write-downs on 3G gear, besides higher finance costs. But its India mobile services business continued to grow, with ARPUs up 5.3 per cent sequentially at Rs 135.
On Wednesday, Vodafone Group Plc head Nick Read once again stressed the critical state of Vodafone Idea, and said the UK major would not inject any fresh capital into its Indian telecom JV with the Aditya Birla Group and the outlook on the JV is “very critical”.
On the implications for Airtel, if Vodafone Idea shuts down, the Airtel CEO said that the matter would hinge on how the Supreme Court responds to the telcos’ plea for negotiating the terms of AGR-related payments with the government.
Vittal also said the company would not bid at the current prices in 5G spectrum auction.
“The reserve price on the spectrum that is being put on the block which TRAI recommended… we have to see what the government does, but what TRAI had recommended on the 3.5 gigahertz band is close to Rs 49,000 or 50,000 crore for 100 megahertz of spectrum … 5G requires large blocks of spectrum, as you know. So at 100 megahertz, Rs 50,000 crore is just something that we can’t afford and it’s… we believe it’s too high priced. So we will not pick it up at those prices.”
The CEO told the analysts that ARPUs need to grow to at least Rs 300 (from current levels) to ensure “reasonable return on capital,” saying that even if ARPU rises to Rs 200, post the last tariff revision (in December 2019) in the fiscal fourth quarter, “it would barely be head above water in terms of return on capital employed as tariffs remain exorbitantly low”.
“Such ARPU stabilisation would hinge on the quantum of 2G users naturally going to 4G, acceleration in the postpaid (user base) and a material change in tariffs”.
Airtel’s strong 4G customer adds were partly a result of Jio’s decision last October to charge users for voice calls to other telco networks, Vittal said, adding that “the move led to a surge of customers consolidating the second SIM and switching to Airtel”. The company added 21 million 4G users in Q3.
“We believe that industry ARPU needs to move to Rs 300 in the long term, this will provide the right balance between customer escalation and sector investments. The ARPU announcement on the back of tariff hikes, data net and overall upgrading of customers ensure that we continued the sequential revenue growth trend that we have been witnessing in the past few quarters. This quarter there has been a reporting change on account of reorganization of our optic fibre operations, which have been transferred to a wholly-owned subsidiary, he said.
Vittal declined to comment on the timing of the next round of price hikes, but said they would “reassess whether the market can absorb another increase in FY21 as the situation is an evolving one”.