Mobile tariffs can’t be sustained, will have to go up: Airtel
23 Jan 2018
Telecom major Bharti Airtel has said the mobile tariffs in the country are at unsustainable levels, but the battle in the industry at present is focused on market share, which continues to put pressure on business.
"I would say pricing today is at a deeply compressed level that is why we have seen the kind of consolidation that has happened in last 12 months. This level of pricing [is] clearly unsustainable. Pricing (rates) will have to lift, but at this point of time there is a fight for market share and that's being driven by the new entrant (Reliance Jio) and therefore pricing remains compressed," Gopal Vittal, managing director and chief executive, India and South Asia, said during an earnings call last week.
India's largest telecom operator Bharti Airtel posted a decline in consolidated net profit for the seventh straight quarter to Rs305.8 crore for the three-month period ended 31 December, 2017 on account of the tariff war.
The Sunil Bharti Mittal led telecom firm had registered a net profit of Rs503.6 crore in the same period a year ago.
On the other hand, Reliance Jio on Friday posted its first-ever profit at Rs504 crore.
Vittal said that customers may be willing to pay Rs.400-500 but they can get unlimited calls and data for Rs130 a month.
"We have revenue sitting above this level. This has resulted in ARPU (average revenue per user) erosion. If you look back over the last 3-4 quarters, the kind of ARPU erosion you have seen, we are unlikely to see that kind of ARPU erosion going forward," he said.
The average revenue per user of Bharti Airtel in India declined by 28.6 per cent to Rs123 in the quarter from Rs172 in the year-ago period.
Vittal said that Indian telecom market will soon be a three-player market apart from state-run Bharat Sanchar Nigam Ltd.
The company is in process of absorbing the mobile business of Tata Teleservices (TTSL) and Telenor.
When asked about time for completing consolidation of TTSL with Telenor, Bharti Airtel Chief financial officer Badal Bagri said, "In terms of Tata (Teleservices) and Telenor, it is slight difficult to predict timelines but we expect Telenor to come around in next quarter or so and Tata can be couple of quarter away from now."
A company representative said that discussions around acquiring additional stake in Indus Tower are currently on with several entities.
