Bharti Airtel to tighten cost control, keep cutting discounts

India's largest telco by users plans Rs 13,000 cr in capital expenditure this year

Bharti Airtel, on Wednesday, said it would continue to cut discounts and free offers on call rates, beside looking at raising base call rates in the coming months.

“Our consistent strategy is to cut discounted minutes on almost every opportunity, as we continue to focus on raising net realisation. We will defer touching headline tariffs (rates) but at some point there may be some opportunity to raise these,” said Gopal Vittal, its managing director and chief executive officer (India & South Asia).

Bharti, the country’s largest telecom operator, with 205 million subscribers in India, has been raising rates for both voice and data services in wireless and wireline services under certain schemes, consistently cutting on freebies for four quarters. Vittal said the current levels of voice pricing were not sustainable with the rising costs of inputs — diesel, network, spectrum charges, fibre and rollout expenses. “If I look at a secular basis over the next couple of years, there is no other option but for voice realisation to go up,” he added.

Voice realisation per minute has improved to 37.07p as compared to 35p four quarters earlier. Other telecom operators had also reduced discounts over the past three quarters, keeping the base rates unchanged. Reliance Communications, however, raised headline rates for prepaid customers by up to 20 per cent earlier this month.

In the coming quarters, Bharti will strip out waste, improve voice realisation, focus on building better data networks and emphasise on bringing in more postpaid subscribers, said Vittal. Ensuring cost efficiency and a tighter operational structure is also a priority.

Vittal said Airtel planned to spend $2.2 billion (Rs 13,200 crore) as capital expenditure during this financial year (2014-15). The telecom market in India is “brutally competitive” and consolidation is bound to take place, he said.

On Tuesday, the company reported an 89 per cent jump in consolidated net profit at Rs 962 crore during the January-March quarter, while revenue increased 13.5 per cent to Rs 22,219 crore.

On exits of senior executives, Vittal said about 80 per cent of vacancies so created had been filled internally. On the decision of the Telecom Disputes Settlement and Appellate Tribunal to okay roaming pacts for third-generation (3G) services, he said the company was still evaluating future strategy on adding customers in the circles where it had 3G intra-circle roaming arrangements with Vodafone and Idea.

Sarvjit S Dhillon, group chief financial officer, said the company would continue to look for options to generate cash, through a mix of organic and inorganic routes. However, there was nothing at present on the table.