According to Gopal Vittal, managing director and chief executive officer (CEO), India and South Asia, Bharti Airtel, the telco will soon achieve the targeted average revenue per user (ARPU) of Rs 200 – Rs 300 in the coming months.
In Airtel’s earnings call, Vittal said that the telco has been targeting this ARPU range for long. However, not only Airtel but other telecom operators have also not been able to reach this target. “An ARPU of Rs 154 is inadequate to turn a reasonable return on capital as a company and remain hopeful that ARPUs will get to Rs 200 in the short term and eventually to Rs 300 which is where it should be for a business like ours,” added Vittal.
The company believes that even at this level of ARPU, it will be very well placed to serve all the lower-end customers who may have the capacity to pay Rs 1 or less.
He said this growth in ARPU was without any tariff hikes which is a good sign for growth. As the difference between prepaid and post-paid customers is narrowing, and with customers shifting from 2G to 4G, there will be significant growth in future. “The full impact of the tariff hike of December 2019 came through in its entirety with no down trading. This again reflects the resilient and quality customer base we have. Even more heartening, 4G customer additions saw continued momentum at 12.5 million,” Vittal said.
Commenting on the impact of COVID-19 on operations, Vittal added that number would have been even better if not for the sudden jolt of COVID-19 that the company dealt with. The quarter also saw strong post-paid net additions. “It is now abundantly clear that telecom is truly an essential service and we are, therefore, hopeful that the government will implement the proposals of the Telecom Regulatory Authority of India (TRAI) and the intent of the new telecom policy to lower the burden of taxes and levies as soon as possible,” Vittal added.
Meanwhile, Airtel is planning to generate meaningful revenue streams from its digital offerings in the next 12 months. As per Vittal, the company has built a strong digital team over the last three years and has apps like Airtel Thanks, Wynk, X Stream and retail app Mitra, among others, under its portfolio.
“I believe we have now scaled our capabilities substantially. We have over 150 million monthly active users across our digital assets – Airtel Thanks, Wynk or X Stream. We have over 1.1 million retailers transacting and making payments every day on our Mitra App. We will leverage our platform to drive growth for Zee, Star, Eros, Hoichoi, Amazon, Netflix, HDFC, Axa, Apollo and a wide number of start-ups. We have also built strong partnerships in the work from home area, in cyber security services, in IoT and in delivering cloud services. Our roster of partners includes Cisco, Zoom, Symantec, Palo Alto Networks, Google, Microsoft and Amazon in addition to many innovative start-ups,” Vittal added.