They flagged a dip in international roaming revenues due to rupee depreciation and lower tower build outs owing to restriction on gas supply affecting the galvanising industry. These led to a fall in Arpu to ₹257 for the March quarter which had two less days due to February, versus ₹259 the previous quarter.
“We’re not happy with the Arpu increase of ₹3 (expected increase with two more days). Part of this issue was linked to the West Asia crisis and international roaming revenues. But we are now determined to double down on all our levers on Arpu and growing and accelerating this pace,” said Managing Director and Chief Executive Officer Shashwat Sharma. He also highlighted issues of memory and chipset supply, along with rising prices of these components in fixed wireless access (FWA) equipment over the last three to four months, which has prompted the company to ‘pivot’ back to installing fiber connections.
“The FWA has become much more expensive. So we’ve pivoted the whole company back to a dramatic obsession on fiber. That has actually been triggered in the month of April and that will play out over the next couple of months before we really ramp this up in a very big way,” Executive Vice Chairman Gopal Vittal added.
He also flagged the need for correction of the current pricing architecture calling it ‘broken’ where unlimited 5G data was available at low cost prices compared to markets like Africa where customers paid for the additional data they consume.
“The fact is that it's the architecture of pricing that fundamentally is broken and needs to be repaired. At the lower entry levels, the price is today at ₹199 in India. At a time like this, to take up prices on those packs is something that we will need to do with caution,” Vittal added. Telcos are widely expected to undertake tariff hikes this year, varying between 15 and 20 per cent, with analysts anticipating the timing in the second half of this year.
Vittal added moving consumers toward structured “small, medium, large and extra-large” plans with varying allowances would create a natural upgrade cycle and support higher Arpu growth over time.
Management also cautioned about the risks from rising smartphone prices and slowing handset shipments, which could slow the pace of feature phone-to-smartphone upgrades. “We have seen some bit of softening of shipments of handsets and prices going up. We haven’t yet seen any impact, but we can’t rule it out,” Sharma said.
Vittal also noted the need for Airtel’s market share in data centres to rise as it aims to build a 1 Gigawatt (Gw) capacity. "We are a big player in the data centre market. We are only at about 10 to 12 per cent share for a company of our size. We are not satisfied with that kind of presence," he said.
Airtel will build 56 edge data centers in the next 12 to 18 months. It has aligned $1 billion investments in Nxtra Data Centers led by Alpha Wave Global and existing investor Carlyle, along with about $290 million to be invested by Airtel.
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