According to Gopal Vittal, managing director and chief executive officer, Bharti Airtel, the telco will initially target 5G rollouts in markets where demand for 4G services is high, while expansion into rural India will depend on how rapidly the 5G devices ecosystem matures. He added that Airtel would use 5G services as a pivot to grow its high-value postpaid business and advance some capex spending to achieve its targeted pan-Indian 5G services rollout by March 2024.
In Airtel’s earnings call for the third quarter of 2022, Vittal informed that about 25-35 per cent of traffic is already getting offloaded on 5G from 4G on a particular site with 5G. So, 5G could be a capacity offload of 4G and therefore, the telco is looking at squeezing its 4G capacity investments. Bharti usually spends about Rs 350 billion annually in its India business alone. While it does not expect an overall rise in capex in the coming years, it may frontload some of the investments early to support the 5G network rollout. He added that on the non-standalone (NSA) technology, the company’s commercial trials are giving a 30 per cent higher coverage than what it would have had if it had adopted standalone (SA) architecture.
Further, Vittal added that Airtel is also upping its rural penetration. The telco is not present in 60,000 high-potential villages. He said that the time is right for the company to expand into these areas.
On the broader tariff hikes in 4G, Vittal said that the positive market response to Airtel’s decision to hike base prepaid rates in Odisha and Haryana in November 2022 had prompted the company to extend the price hike to 17 markets. As per Vittal, increasing the entry-level rates in 18 markets was a calculated bet, but the company cannot do this unilaterally and if it does and loses market share, drawing that share back would actually be far more difficult. He continued to express concerns over the lower returns on capital employed and reiterated the stance to take average revenue per user (ARPU) to Rs 300.
With regard to Airtel’s 5G business strategy, Vittal said that the telco would soon be running pilots around 5G-based fixed wireless access (FWA) service, but it is in no hurry to launch it. This is since a key router device, known as customer premise equipment (CPE), costs around $180-200 per piece, potentially making FWA service too expensive. He noted that factoring in the very high cost of a CPE, the cost per connected home via FWA is a hefty $100, which is double that of fibre.
