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Tariffs need to go up as current prices are unsustainable: MD & CEO

Bharti Airtel on Thursday reiterated that tariffs need to go up as the current prices are unsustainable but did not share a specific timeline about the next hike. The company said average revenue per user (Arpu) needs to go up to Rs 300 per month in the long-term from the current Rs 157. Also, the company has highlighted plans around building new revenue streams from its digital offerings.

Speaking to analysts during the post-results investor call, Gopal Vittal, MD and CEO, India & South Asia, said the company has always maintained that Arpu needs to go up to Rs 200 and to Rs 300 eventually as the current prices are unsustainable. “The organic increase in Arpu is modest and is only a function of 2G to 4G upgrade and some post-paid subscribers. At some stage, price correction must take place,” Vittal said.

Currently, so much data allowance is given at such low Arpus and that is the reason why data consumption during the quarter increased so much, despite the company adding just 2 million 4G customers. “An increase in data usage by an existing customer is not bringing additional revenue for the company,” he added.

Asked about the digital strategy of Airtel given that Reliance Jio has raised so much money for its digital platforms, Vittal said he will not comment on competition but insisted the company’s digital offerings will be scaled up to build new revenue streams.

Vittal said the strengths of Airtel are being used in three big areas for digital services –building an ad tech platform using the digital assets that have a unique monthly active user reach of 155 million. “We are well on our way here and are working with many companies to test our platform and have started seeing some revenues flow in, albeit small,” he said. Secondly, the company will continue to build partnerships across B2B and B2C, that will bring in commissions for the company and thirdly, Airtel is building its own set of services and products, details of which will be announced soon.

In contrast to Reliance Jio, which has built most of its products in-house, Airtel has adopted a partnership model. For instance, Jio has launched its own video-conferencing solution JioMeet while Airtel has partnered with Verizon to come up with Airtel Blujeans.

“On the B2C side, our digital teams have built a converged platform – Airtel X Stream that brings together OTT and content partnerships across mobile and home …we have built partnerships with Zee, Disney, Amazon, Eros, Curiosity Stream and several others to provide an endless array of entertainment to our home customers,” Vittal said.

Asked about the impact of Covid during the quarter, Vittal said due to supply chain issues, there has been fewer number of 4G additions but the situation is improving. “May was resilient than April and June was resilient than May. The erosion of low-end customers took place in the quarter but it has stopped now and going forward, there will be growth in subscribers. There is massive surge in home broadband,” he added.

On AGR matter, the company said the incremental provisioning of over `10,000 crore could be final as it has been done in pursuant to the Supreme Court order.

On a question on 5G, Vittal said the indicative price proposed by Telecom Regulatory Authority of India (Trai) is too high and the company can’t afford it. “The ecosystem is still at a nascent stage and it will be couple of years before 5G will have some significance. There is no point getting too ahead,” he said.

Asked about the Chinese companies like Huawei and ZTE, Vittal said currently Airtel is working with all partners including the Chinese and the company is committed to work with them but if there is a government notification regarding Chinese firms, Airtel will abide with it.

To a query about bringing a strategic investor, Harjeet Kohli, group treasurer and chief investor relations officer, said it’s not a necessity from a liquidity point of view but partnerships may happen.

-Financial Express

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