Major rollout of 5G service only in FY24, Airtel tells investors

Bharti Airtel expects major rollout of 5G service only in FY24 due to limited handset penetration but the company said it is prepared to accelerate launch if competitive pressure demands so.

The Airtel management indicated this at an investor meet last week.

The telecom sector regulator initiated a consultation exercise last December seeking industry views on issues such as 5G spectrum pricing and valuation. The auction of 5G spectrum is expected in the next two-three months after finalisation of recommendations. Airtel management said its network is 5G ready but expects major rollout of service in FY24 as a base case, according to a Credit Suisse report.

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“The management underscored its principled approach wherein it will rollout 5G only on sites with high 5G handset penetration and increasing 4G penetration. This will lead to a steady capex over the next 3-4 years even with the 5G rollout. However, there can be lumpiness due to timing and pace of the rollout leading to higher capex in a year and lower in others,” Edelweiss Securities said.

Airtel is driving up its average revenue per user through premium offerings and scaling up its portfolio of non-wireless businesses, which also includes payments bank and data centres. The company’s non-wireless business led by enterprise, home broadband and direct to home segments accounts for 28 per cent of its annual India business revenue.

Its digital businesses have 184 million monthly active users. The company’s digital strategy allows it to grow customers, increase wallet share and lower costs. It is also cross selling personal loans and credit cards to pre-approved users through its digital marketplace, Airtel said.

According to Kotak Institutional Equities Research, Airtel management indicated that it will look to monetise its stake in Indus Towers, payments bank, Nxtra (data centre business) and fiber assets.

For now, the company is increasing its stake in Indus Towers to 46.4 per cent by acquiring 4.7 per cent stake. The company may further increase stake in Indus Towers, if needed to provide stability to the company, before monetising its stake, Kotak Institutional Equities said.

On Monday, Bharti Airtel's scrip on BSE closed trading 3.4% higher at Rs 733.35.