Airtel Targets Rs 300 ARPU, 5G FWA Launch by Sept

New Delhi, Aug 6 (PTI) Telecom service providers in India need an average revenue per user of Rs 300 for respectable return on investments, the country's second largest telco Bharti Airtel said on Tuesday.

The company also said it plans to roll out fixed wireless access (FWA) broadband services on pure 5G network by September.

Airtel said its mobile subscribers' average revenue per user (ARPU) increased by 5.4 per cent to Rs 211 during June 2024 quarter compared to Rs 200 in the same period a year ago.

Bharti Airtel Managing Director Gopal Vittal during the company's earnings call on Tuesday said that tariff hike in July was very much required for the financial health of the industry.

"The industry undertook a round of tariff repair in early July, which was much needed for the financial health of the industry. The early signs from this repair are encouraging with a full flow through expected in two quarters.

"I do want to underscore that the industry needs a minimum of Rs 300 ARPU for long-term sustainable investment and respectable return ratios," Vittal said.

He said that with improvement in financial health, the company will generate a lot more cash and it will look at lowering debt as well as on dividends.

"Our return on capital for our business is hovering around 9 per cent in India and that is really abysmally low. The benefit of repair in the tariff gives you a lot more operating leverage where overall return on capital improves modestly. It is not good enough but it certainly improves. Once we get to Rs 300 (ARPU), there will be reasonable returns in the industry," Vittal said.

He said that post tariff hike there has been modest 2G SIM consolidation.

Bharti Airtel on Monday reported more than 2.5 times jump in its consolidated profit at Rs 4,160 crore in the April-June quarter of 2024-25 compared to the year-ago period, driven by an improvement in average revenue per user and an exceptional gain of Rs 735 crore.

The company had posted a profit of Rs 1,612.5 crore in the same period a year ago.

The consolidated revenue from operations of Bharti Airtel increased by 2.8 per cent to Rs 38,506.4 crore during the reported quarter from Rs 37,440 crore in the June quarter of the last year.

Vittal said the impact of mobile tariff hike will be realised in the next two quarters.

Airtel has raised mobile service rates across plans in the range of 10-21 per cent. Airtel's competitor Jio and Vodafone Idea have also increased mobile services rates.

Vittal said that the company is planning to roll out fixed wireless access (FWA) broadband services on a pure 5G network, technically called as standalone (SA) network.

He said that FWA data consumption is almost 15 to 20 times more than the mobile data usage, and it needs a dedicated network layer for downlink and uplink to serve this multi-device connectivity across devices at home.

"In such a scenario network slicing with SA enables a superior experience to customers. We are well positioned for this as we will be able to use our 3.5 gigahertz spectrum along with a large pool of mid-band spectrum holding through carrier aggregation to roll out SA in an effective manner. We are ready and are planning to go live with SA technology for FWA within this quarter that we are in," Vittal said.

He said while Airtel will run FWA on standalone 5G network, the company will continue to operate mobility networks on non-standalone.

Bharti Airtel's WiFi services comprising fibre-to-the-home (FTTH) and FWA are available in over 1,300 cities.

Vittal said that in the long term fibre will continue to be a reliable technology for broadband.

He said that the connectivity business is growing in the range of 4-5 per cent and the company needs to look at adjacencies.

Vittal said the company will focus on growing cloud business and other enterprise services like Communications Platform as a Service (CPaaS).

The cloud service has a huge growth potential where the public cloud market is about USD 4.9 billion and growing at 35 per cent and the private cloud market is about USD 3.6 billion growing at 16 per cent, he said.

"Enterprises are moving more and more towards a hybrid cloud approach. In addition, there are certain industries like banking, which have regulated sovereign requirements of cloud as well.

"We believe our strengths lie in leveraging our data centres to cater to such private and sovereign requirements, as well as leveraging our deep partnerships with major cloud players like Google and others to offer a hybrid solution," Vittal said.

He said there has been softening in the global business of Airtel portfolio with many over-the-top players deferring their spend.

"This calls for greater urgency to re-engineer our portfolio. We have substantial investment in capabilities like CPaaS. Second area of focus for us is the cloud. Here we are putting in significant investments in managed services capability," Vittal said.

He said that the company has partnered with a large technology player to chase business in the banking segment to meet their sovereign hosting of data.