Bharti Airtel to attain target ARPU with two-three tariff hikes

Bharti Airtel is looking at two-three rounds of fresh tariff hikes in the coming years to attain its targeted ARPU (average revenue per user) of `300. However, any move to increase rates will depend on Reliance Jio following suit. The company also plans to continue with its annual capex of around `20,000-21,000 crore over the next two-three years as it rolls out its 5G network.

The company shared the details of its plans with analysts on March 25.

The ARPU of Bharti Airtel has risen from Rs 117 in Q3FY20 to Rs 163 in Q3FY22. Apart from tariff hikes, ARPU can be inflated through feature phones upgrades and monetisation of digital engagement.

Over the past two quarters, the company has done several tariff hikes to improve ARPU. It had increased tariffs on certain postpaid plans across retail and enterprise segments during Q2FY22, while in November 2021 it increased the prepaid tariffs across all price points by 20-25%, including unlimited plans as well as combo vouchers.

After the Q3FY22 results, Gopal Vittal, MD and CEO, India and South Asia, had said the company hopes to achieve ARPU of Rs 200, preferably in 2022 itself, and then settle soon after in the next few years to Rs 300. “From my perspective, I do expect a tariff hike sometime in 2022, don’t think it’s going to happen in the next 3-4 months simply because of the SIM consolidation and growth needs to come back, but I do expect another round of tariff increases. Of course, it ought to be determined by the competitive dynamics and by what happens to the other players, but we would not hesitate to lead it as we have done in the recent past,” Vittal had said.

The company reiterated its focus on quality subscribers by offering good experience. The company said a 40% reduction in network complaints over the past two years reflects its efforts to improve experience.

“It did not view affordability as a constraint for smartphone customers and is willing to lead future tariff hikes subject to Jio also following suit. Omnichannel experience with converged offerings, digital propositions (Xstream, payments bank and Wynk, etc) and an aspirational brand positioning along with network investments have enabled Airtel to gain premium customers — Airtel’s share of 4G net adds has grown in the past 3 years (32% in FY20 to 70% in 1H FY22),” Credit Suisse said in a report.

Bharti Airtel is also looking to leverage its digital offerings to improve experience and cut costs. In the wired broadband segment, it targets 40 million customers by FY25 from the current 16 million. The Financial Express