Adding Pre­mium Users a Key Chal­lenge: Vit­tal

Air­tel MD says the price of 700 MHz waves is high and un­af­ford­able

The Economic Times - - Companies: Pursuit Of Profit - Our Bureau

Kolkata: Bharti Air­tel’s data pen­e­tra­tion has flat­tened na­tion­ally over the past few months, and a key chal­lenge go­ing for­ward would be at­tract­ing new sub­scribers to its pre­mium mo­bile broad­band ser­vices in a fiercely com­pet­i­tive mar­ket, Gopal Vit­tal, man­ag­ing di­rec­tor, In­dia & South Asia, has said.

Vit­tal on Thurs­day re­it­er­ated that the rec­om­mended base price of 4G air­waves in the cov­eted 700 Mhz band — .₹ 11,485 crore a unit of pan-In­dia spec­trum — was “very high and un­af­ford­able”, es­pe­cially since bulk of “Bharti Air­tel’s spec­trum needs had been met,” fol­low­ing its re­cent 4G airwave ac­qui­si­tions from Video­con and Air­cel. How­ever, he in­di­cated the mar­ket leader is open to boost­ing 3G spec­trum hold­ings in the next auc­tion, es­pe­cially in mar­kets like Ker­ala where it still does not have 3G air­waves. He was par­tic­i­pat­ing in an earn­ings call a day af­ter the Sunil Mit­tal-led telco re­ported a 2.8% rise in net profit to .₹ 1,290 crore in the fis­cal fourth quar­ter. His con­cerns re­gard­ing the “flat­ten­ing of data pen­e­tra­tion” come at a time when Bharti Air­tel has seen a se­quen­tial dip in both av­er­age data re­al­i­sa­tion per MB (ARMB) and data av­er­age rev­enue per user in the Jan­uary-March quar­ter. Also, rev­enue from data as a pro­por­tion to mo­bile ser­vices in­creased mod­estly to 23.3% from 23.1% in the pre­vi­ous quar­ter.

Vit­tal said that In­dia’s No 1 mo­bile op­er­a­tor would ex­pe­dite steps to “boost in­ter­net lit­er­acy” at the con­sumer level and also en­gage more ag­gres­sively with con­tent providers to boost ap­petite and grow data pen­e­tra­tion lev­els na­tion­ally. His com­ments as­sume im­por­tance in the lead up to Re­liance Jio In­fo­comm’s much awaited launch, es­pe­cially since in­cum­bent car­ri­ers such as Bharti Air­tel are try­ing to wrest as many high­end data cus­tomers as pos­si­ble be­fore the Mukesh Am­bani-led telco’s 4G ser­vices go live com­mer­cially. Mor­gan Stan­ley warned that data ARMBs could fall fur­ther amid ris­ing com­pe­ti­tion, es­pe­cially once Jio launches. “Voice tar­iff hikes could be tough and in­cum­bents also face the risk of data can­ni­bal­iz­ing voice as well as mar­gin pres­sure, with ris­ing com­pet­i­tive in­ten­sity,” said the US bro­ker­age.

How­ever, Vit­tal is up­beat about the ris­ing ap­petite for 4G ser­vices with the ad­vent of de­vices at com­pelling price-points. “We’re clearly see­ing trac­tion on the 4G front with a wealth of com­pat­i­ble de­vices now avail­able at the af­ford­able .₹ 5K to 6K range, cou­pled with the ris­ing data flow through on our 4G net­work,” he said.

Bharti Air­tel is also ex­plor­ing ways to raise voice re­al­i­sa­tions in the con­text of the cur­rent com­pet­i­tive dy­nam­ics. “We will to do this by driv­ing qual­ity cus­tomer ac­qui­si­tions and also keep­ing a tight check on churn.”

The com­pany’s global fi­nance head Ni­lan­jan Roy said the capex guid­ance for FY17 would be $3 bil­lion, of which $2.2 bil­lion would be ear­marked for In­dia and South Asia, re­main­ing $800 mil­lion for Africa. In Novem­ber 2015, the telco ear­marked .₹ 60,000 crore for net­work trans­for­ma­tion and ex­pan­sion un­der ‘Project Leap’ for a three-year pro­gram.

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