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Airtel calls for tariff repair in telecom industry

Telecom services provider Bharti Airtel (Airtel) on Wednesday said that tariff repair is required because it is still at a very low level in India as compared to other parts of the world.

The Sunil Mittal-led company has been flagging low tariffs in the Indian telecom industry since the launch of 4G services by Reliance Jio in 2016 and has been vocal on increasing the average revenue per user (ARPU) to at least ₹300.

Key matrix
Airtel’s ARPU grew by eight per cent to ₹209 as of the fourth quarter ended March 31, from ₹193 a year ago period. On a sequential basis, the ARPU which is a key matrix for telecom operators, was marginally higher as compared to ₹208 in the December quarter.

“The return that the industry really needs is predicated on tariff repair, this is really the heart of the problem that we have today. Our pricing and tariffs are at an absurdly low level relative to any other part of the world. So, tariff repair is needed for return ratios to improve…it doesn’t matter which technology it comes from,” Gopal Vittal, MD, Airtel said during the fourth quarter (Q4) earnings call.

The telecom industry has seen two rounds of of hikes in the last couple of years and every time there is an increase, there is some sort of consolidation happening. The fact that mobile services have become so essential in people’s life, they will adjust their spends to deal with the increase, he said.

Substantial repair
“We have moved up the entry-level tariffs on feature phones, we have tried to sort of drive all the levers of tariff upgradation across the multiple levers that we have, using a lot of digital analytics. But, at the end of the day, it is a competitive market and repair will need to happen across the industry, just us doing it, but if the competition does not follow, then it will hurt us and that is a challenge,” Vittal noted.

Therefore, the company has to see and wait until the time is right. “My own sense is that you will need a substantial repair in the industry. We have already crossed ₹200 ARPU and I think the right level of ARPU even at ₹300 will still be the lowest in the world,” he added.

Talking about rival Vodafone Idea’s recent massive fund raise, Vittal said he is happy to see the company had raised money adding that India will be well served if it has three private operators.

Airtel on Tuesday had declared a 31 per cent y-o-y decline in its Q4 consolidated net profit to ₹2,072 crore. Its consolidated revenue however, grew four per cent y-o-y to₹37,599 crore. The Hindu BusinessLine

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