A day after Bharti Airtel announced a 26.8 percent decline in net profit on a year-on-year basis at Rs 829.6 crore, chief executive Gopal Vittal said the telco would not hesitate to take the lead in hiking tariffs.
"We do not expect another tariff hike in the next three to four months, but hopefully, it will happen in 2022," Vittal said on February 9 during a post-earnings call with analysts.
"We will not hesitate to take the lead when it comes to tariff hikes."
'Need to hike rates for stable business model'
Airtel, the country’s second-largest telecom company, hiked tariffs by 20-25 percent in November, saying it was essential for a "financially stable business model". Data top-up plans were also made costlier by 20-21 percent.
Days later the other telecom service providers also raised tariffs.
Timeline on ARPUs
Giving a timeline for the first time, Vittal said the company hoped average revenue per user (ARPU) would get to Rs 200 within this year. The company reported ARPU at Rs 163 for the October to December quarter. The company ultimately wants its ARPUs to settle at Rs 300.
Airtel's stand on 5G auctions
Vittal said on Wednesday the company could see 5G auctions happening in May or June.
"We are hopeful that there will be a substantial reduction in spectrum prices," Vittal said. "5G shipments are still in teens as a percentage of smartphones. From a consumer standpoint, the real pace of 5G will be in 2023-2024."
He said high levies need revision, and high reserve prices need to be lowered for the auctions to be viable.
Also Read: Bharti Airtel Q3 Earnings: Net profit down 27% at Rs 830 crore, misses Street estimates; ARPU at Rs 163
Vittal sees rapid growth of the 5G network in the next five to seven years. "Fibre to the home is a massive opportunity for us. We will make investments to take our network to 2,000 towns in India," Vittal said on the call.
What do market experts say?
"Airtel's ARPU has continued to increase sequentially. We have seen ARPU coming to Rs 163 in the December quarter up from about Rs 157 in the September quarter and lower even in the earlier quarter so, there is a 7 percent clear growth," Kunj Bansal from Investment-Illiteracy.com said.
"There is cash flow, and there is a clear growth. For the medium to long term, it looks like the stock will continue to do reasonably well."
'ARPUs should continue to gallop'
"A couple of things have started working for Airtel. One is it is filling in the gap created by Vodafone's exit from the premium segment. It's not focusing itself on the lower end of the subscriber base. Everybody wants to reach out to the premium users because that is where the data growth is much faster," market expert Prakash Diwan said.
"The second thing is the African business has started throwing up cash after a long time. But a lot of the goodness is priced in. Unless ARPU continues to gallop, as they seem to be, you might not see too much of a price improvement hereon."
"If something goes in their favour in terms of the 5G launch timelines, in terms of some USPs that they can exhibit, yes, then you will probably have a second leg of the re-rating," Diwan said.
According to Gurmeet Chadha, co-founder and CEO of Complete Circle Consultants, the company continued to add the highest 4G users.
"The ARPU is also growing – it is at Rs 163, which is industry-leading. I think ARPUs are only going to increase. Every segment has started doing well. Valuation wise, it is a far more reasonable stock, considering the levels we are at. I would be a little keen to watch how the digital portfolio shapes up."
(Edited by : Amrita Das)
First Published: IST