5G rollout will be limited in near term, says Airtel CEO Gopal Vittal

Commercial 5G service will see a limited roll-out in 2022 and 2023 due to the limited number of 5G-enabled handsets and the nascent ecosystem, said Bharti Airtel’s South Asia Managing Director and Chief Executive Officer Gopal Vittal.

On Tuesday, the Digital Consumer Commission cleared the auction of 5G spectrum and a final decision in this regard will be taken by the Union Cabinet. The government hopes to complete the first round of auction in June and roll-out services by the end of the year.

Vittal, who has been reappointed as CEO and MD of Airtel, said the firm isn’t planning an aggressive roll-out of 5G services in the near term.

Addressing analysts in a post-result conference call on Wednesday, Vittal said the total number of 5G-enabled devices in the country is just 4 per cent, and though shipments are growing, the share is expected to be around 15-16 per cent by March 2024.

Besides, none of the 5G applications and use cases is ready. Vittal said Airtel will wait and see how the ecosystem pans out before going aggressive on 5G expansion.

He also expressed disappointment on the reserve price recommended by the Telecom Regulatory Authority of India (Trai) for spectrum auction. “While there has been a reduction, it has not been adequate and is in that sense disappointing,” he remarked. “I will not comment on our strategy and approach since it is dependent on the final reserve price finalised by the government,” he added.

Vittal also hinted that there could be another round of tariff hikes this year, which will help Airtel’s average revenue per user (ARPU) to touch Rs 200. Last November, the telecom companies announced a 20 per cent tariff hike and this helped them increase ARPU, with Airtel reporting an ARPU of Rs 178, which is the highest in the industry, in the fourth quarter.

While the tariff hike contributed to revenue growth, the telecom sector is also seeing a consolidation of SIM cards and slowing down of 4G customer additions. The Airtel CEO attributed this to the semiconductor shortages and increase in chip prices, resulting in an increase in smartphone prices. While smartphone shipments are subdued due to these challenges, Vittal said this was only a temporary phenomenon.