Telecom reforms will drive investments: Airtel CEO

The reforms announced by the government recently for the telecom sector will help preserve cash flows and enable the industry to drive investments, a top official at Bharti Airtel said on Wednesday.

Hope for rise in postpaid

Speaking at the investors call, Gopal Vittal, Managing Director and Chief Executive Officer — India and South Asia, Airtel, also said that the company was hoping for a growth in postpaid customers in India so that there is opportunity in the premiumisation of the growth.

“Postpaid historically has not seen much traction in the last four years given the very depressed pricing on prepaid (Reliance Jio). It is now beginning to see some traction in the last few quarters but if you look at markets like Brazil and Philippines, postpaid tends to be 50-60 per cent of the business. So… it should keep growing,” he said.

Also see: VIL and Airtel choose to defer payments for spectrum and AGR dues

In the quarter gone by, Airtel had launched Airtel Black — an all-in-one solution for homes — where customers can bundle two or more Airtel services (Fiber, DTH, Mobile) together on one single statement of accounts. The company had also announced new postpaid plans for corporate and retail customers.

5G roll out

Vittal — who was speaking at Airtel’s second quarter earnings call — said that while, over the next three-four years, 5G will be present on ubiquitous basis in most key cities, in the immediate short term, much will depend on the pace of the regulator’s consultation and actual timing of the auction.

“As you are aware, the government announced seminal reforms that will help preserve cash flows and enable the industry to drive investments. There have also been substantial steps taken to simplify the way we do business by cutting back on several needless approvals and easing the customer on-boarding processes,” he said.

To a question on deferment of payments, Vittal explained that upon opting for the moratorium (as Airtel has), the interest payable on moratorium is converted to a net present value (NPV), with one or two choices.

Also see: Telecom reforms not sweeping enough

“One, is to defer the payout at the end of the four-year period or to actually pay it every year in the anniversary period that comes in, or to convert into equity. All options are still open,” he said.

The decision on converting to equity has to be taken in January but the other two decisions are calls that can be taken every year. The company will continue to be prudent and ensure that the business continues to invest in areas of massive growth such as broadband, data centres, enterprise business, digital assets and rolling out of 5G networks, Vittal said.

Spectrum strategy

When asked about timelines for 5G rollout, he said the industry has urged telecom regulator to look at all spectrum bands. “You need to look at all spectrum bands to see what is the totality of spectrum that will be available in India…much of it is sitting with defence so that has to be unlocked to make sure that we are able to, as operators, understand what should our spectrum strategy be,” he said.

Also see: Airtel Q2 net profit at ₹1,134 crore, ARPU at ₹153

He said the 700 MHz band spectrum was “very high priced” and saw “three failed auctions” and those need to get “substantially moderated in terms of price”.

On average revenue per user (ARPU), Vittal said the mobile industry’s ARPUs are not sustainable and should improve to ₹200 in the near term, and ₹300 in the longer term.