Airtel May Lead Tariff Hikes, Won’t Charge Extra for 5G

Gopal Vittal, the Managing Director of Bharti Airtel, has stated that the telecom giant may eventually lead in implementing much-needed tariff increases, but for now, they will not charge extra for 5G services. He emphasized that Airtel is not in a race to achieve the fastest or largest 5G rollout in India.

All About the Airtel Plans Price Hike

During the fiscal second-quarter earnings call, Vittal expressed concerns about global tech firms conducting tests of one-time password (OTP) delivery over routes other than SMS. He noted that this exposes customers to fraud and phishing, for which telcos can be held liable. Vittal mentioned that Airtel had already increased the prices of entry-level plans unilaterally, and they are making adjustments to some smaller plans. He stressed the need for headline tariff hikes to ensure financial viability in the telecom industry.

Airtel will focus on striving for an overall tariff increase but will not charge more for 5G services. Vittal also highlighted the importance of developing applications that leverage the benefits of 5G technology, which are currently underutilized. Airtel’s strategy of premiumization has driven higher postpaid and home broadband additions, with nearly 1 million postpaid additions in the September quarter, the highest ever for the company. This growth is attributed to family plans, expanding retail touchpoints, and leveraging 5G to attract customers.

The migration of prepaid customers to postpaid, along with data monetization and increased international roaming usage, contributed to Airtel’s average revenue per user (ARPU) growth of 1.5% in the quarter. Vittal noted that the gap between entry-level and smartphone plans has decreased, affecting the incremental ARPU. Airtel reported a 37.5% YoY decrease in consolidated net profit for the September quarter due to an exceptional charge but saw a 7.3% YoY increase in revenue.

Vittal discussed the enterprise segment and mentioned a slowdown in global business due to the deferment of bandwidth demand by some over-the-top (OTT) and technology players, which is expected to stabilize in the coming quarters. He also expressed concerns about international tech players testing message delivery over platforms other than SMS, which poses challenges related to phishing, fraud, and spam, for which telcos are liable.

Regarding lower capital expenditure (capex) in the September quarter, Vittal attributed it to seasonality and stated that capex for the year should remain in the same ballpark. However, there may be some moderation in the coming year. Airtel’s India mobile capex was down 27.4% from the previous quarter, and analysts noted the risk of lower capex potentially impacting market share compared to aggressive competitor Jio‘s 5G rollout strategy.