Telecommunications reforms to help preserve cash flow and boost industry investment: Gopal Vittal, CEO of Airtel
Gopal Vittal said that in the short term a lot will depend on the pace of the regulator’s consultation and the actual timing of the auction.
Fundamental reforms announced by the government for the telecommunications sector will help preserve cash flow and allow the industry to boost investment, Airtel CEO Gopal Vittal said on Wednesday.
Mr Vittal, who was speaking on Airtel’s second quarter earnings conference call, said that while over the next 3-4 years 5G will be ubiquitous in most key cities, in the immediate short term, much will depend on the pace of the regulator. consultation and the actual time of the auction.
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“As you know, the government has announced fundamental reforms that will help preserve cash flow and allow industry to stimulate investment. Substantial steps have also been taken to simplify the way we do business by reducing several unnecessary approvals and facilitating customer onboarding processes, ”he noted.
When asked about deferral of payments, Mr. Vittal explained that by going with the moratorium (as Bharti did), interest payable on the moratorium is converted into a net present value (NPV), with 1- 2 choices.
“One is to defer the payment at the end of the four-year period or to pay it every year during the anniversary period that arrives, or convert it to equity. All options are still open, ”he said.
The decision to convert to equity is due in January, but the other two decisions are appeals that can be taken each year. The company will continue to be fiscally prudent and ensure that businesses continue to invest in massive growth areas such as broadband, data centers, enterprises, digital assets and the deployment of 5G networks.
When asked about 5G rollout timelines, Vittal said the industry has urged the telecommunications regulator to look at all spectrum bands.
“You have to look at all the spectrum bands to see how much spectrum is going to be available in India… operators, understand what our spectrum strategy should be,” he said.
The spectrum for the 700 MHz band was “very expensive” and has seen “three failed auctions” and these must be “considerably moderate in terms of price,” he said.
“Then there’s 3.5 GHz where a lot of the spectrum is defense, how much spectrum will be available is another question and of course there’s the mm wave band (millimeter waves). .. so all of this spectrum will have to be put on the block and I don’t know if that can happen anytime soon, ”Mr. Vittal said.
These deliberations could take some time, Mr Vittal said, adding “but we’ll wait and see when this consultation is complete, then it will be the DoT (Department of Telecom) and then of course the spectrum will be put on. the block”.
The company continues to believe that the ARPUs (Average Revenue Per User) in the mobile industry are unsustainable and are expected to increase to 200 in the short term and 300 in the long term.
Airtel on Tuesday reported net profit of 1,134 crore yen for the September 2021 quarter and said it was seeing strong business momentum with growth in 4G customers and an increase in mobile ARPU.
This is against a loss (attributable to owners of the parent company) of 763.2 crore in the quarter of last year.
The second quarter figures were bolstered by an exceptional gain (after tax) of 540.4 crore. Bharti Airtel announced in August that it had reached an agreement with Reliance Jio Infocomm to transfer the “right to use” of its 800 MHz spectrum in three circles to Jio.
Airtel consolidated revenue for the second quarter of FY21 was 28,326.4 crore, up 18.8% year-on-year (like-for-like) and 13% year-on-year annual in published data.