Bharti Airtel CEO indicates another round of tariff hike

The company last raised tariffs by up to 42% in December.

Bharti Airtel Ltd chief executive Gopal Vittal on Thursday hinted at another round of tariff hike, stressing that the telecom operator’s average revenue per user (Arpu) needs to move towards ₹200 a month, and eventually to ₹300, for a sustainable business model.

Vittal did not give any timeline for the next increase in call and data tariffs.(Reuters)

Vittal did not give any timeline for the next increase in call and data tariffs.

He was addressing an analysts’ call, a day after the telco reported a loss of ₹15,933 crore in the June quarter due to provisions of ₹11,746 crore made towards statutory dues. Airtel’s Arpu in the June quarter was at ₹157, up from ₹154 in the March quarter.

The company last raised tariffs by up to 42% in December.

Airtel’s chief financial officer Badal Bagri said the provision made for adjusted gross revenue (AGR)-related dues should be considered “full and final”. The company also said its liquidity position is comfortable, implying no challenges in paying the dues.

The department of telecommunications (DoT) estimated Airtel’s dues at around ₹43,780 crore, of which the telco has already paid ₹18,000 to the government.

“We have taken an incremental provision…This is full and final because, as per the (Supreme Court) order, this (the dues) cannot be challenged, recalculated or reassessed,” Bagri said.

The company, however, hopes the dues are to be paid over a few years, said Harjeet Kohli, director in-charge of finance. “Financing-wise, it (fundraising for clearing AGR dues) is not really necessary. We have cash on the books. There are no liquidity access issues and there is no immediate need to add to the payment provisions,” Kohli added.

The Supreme Court is yet to pronounce its order over staggered payments of AGR dues. CEO Vittal declined to comment on the issue as the order is reserved. Airtel and rival Vodafone Idea Ltd have requested for a 15-year payment window.

Vittal pointed out that the fundamental issue with 5G is the cost of spectrum, which “is way over the top for any kind of business model to work. The cost of spectrum needs to come down and the ecosystem needs to evolve”, he said.

“We have always maintained that the indicative reserve price on the spectrum of 5G--the 3.5 GHz band--are very, very expensive and we will not be able to afford it at those levels. Secondly, the ecosystem for 5G is very nascent,” Vittal said.

He said the commercial roll-out of 5G is still a few years away, while billionaire Mukesh Ambani recently announced that his company Reliance Jio Infocomm Ltd has readied indigenous 5G solutions and can start trials as soon as spectrum is made available.