No extra cost for 5G, FWA to mirror broadband rates, Airtel’s Vittal

Airtel’s managing director and chief executive Gopal Vittal advocated for higher data tariff in India. In an interview, Vittal said while India has the lowest tariffs worldwide, it would remain so, even if it raises the average revenue per user (Arpu) from ₹200 to ₹300. But Airtel will not charge a premium for its 5G services, and aims to start its fixed wireless access (FWA) services by next year, pricing it on a par with broadband services, he said. The telco is also open to distributing satellite services beyond OneWeb, starting June. Vittal also spoke about the possibility of diluting equity or listing Airtel Payments Bank once margins improve, and clarified it will not opt for a rights issue, citing adequate operating free cash flows to meet its current needs and for deleveraging. Edited excerpts:

Is there headroom to further raise entry-level tariffs? Or do you think it’s time to raise headline tariffs?

I think we’ve already done that(raising entry level tariffs). I feel that actually the prices for data are very compressed. That’s where there’s a big (opportunity). The low entry level prices we moved up, we are now at ₹155 but for 45 GB of data, unlimited calling, unlimited texting, at ₹230 is just way too low, that needs to go up. That’s where the bulk of the industry plays.

Considering that you’re looking at avenues to increase tariffs one way or the other, when would you take the call on pricing 5G plans separately?

We don’t believe that 5G should have separate plans or premium plan. For a customer data is data. We believe in segmenting so that if you offer more value to a customer in tangible and intangible forms, you can charge a higher price. But 5G by itself is not going to drive ARPU. For us, overall tariff table needs to go up.

When are you planning the rights issue?

Our operating free cash flows are more than adequate to meet both capital requirements as well as any deleveraging that we want to do.

We’ve paid off a lot of high-cost spectrum. So, at this point, there’s no intention to opt for a rights issue.

When is FWA expected to be commercially available, and what will be the pricing like?

We believe that the right strategy for us is to go with outdoor premise equipment. We have placed the orders. I hope early next year, we should see the launch of fixed wireless access. The pricing plans will be more or less matched with our broadband services, because we consider FWA and broadband as one. Where we are able to offer fibre, we will always be offering fibre because it is going to be a significantly superior experience than any mobile experience. But, where we are unable to provide fibre, we will provide FWA.

However, once we get fibre in that location, we will switch customers to fibre.

When do you plan to list Airtel Payments Bank?

The payments banks has 50 million monthly transacting users, roughly ₹250,000 crore of annual throughput, profitable on its own merit, but the margin model is very challenged because it’s a thin-margin business. We want to be developing some scale around this, and at some stage we will dilute. Airtel has 70% holding, so we would be happy to either bring an investor or list it, but no immediate discussions.

What will be your game plan for the upcoming auctions?

We bought a lot of spectrum last few years. The mid-band spectrum is our asset, where we’re running NSA (non-standalone) 5G, and we’ve proven that in our experience, we are leading.

We do have some renewals in four or five circles, including Bihar, eastern Uttar Pradesh, Odisha and Jammu Kashmir, where renewal is coming up in 2024. So, there may be some amount of supplementing that we’ll need to do, but beyond that, we do have a pretty good spectrum bank now.

What kind of a first-mover advantage will Airtel get being a distributor for OneWeb. What’s the overall business opportunity in satellite services sector?

From a retail standpoint, we will be a distributor of satellite services, and we will be open to work with any company.

Obviously, OneWeb is part of Bharti Enterprises-backed company, we have arrangements with them, and they are likely to launch the services sometime in the first half of next year. We’re also open to working with others. This is a large untapped opportunity, so its less about a first-mover advantage, and its more about providing services where there aren’t any. So, it is okay if there’s more competition.

Do you expect smartphone shipments to rise in 2024?

Post this Diwali, you should start seeing some improvement in shipments. The reason is that the customer was shocked initially, when prices went up. Now, that shock has worn off. So, I think shipments should start coming back up. Livemint