Airtel to reduce Capex in current fiscal despite 4G push

Bharti Airtel on Tuesday said its Capex will be lower in fiscal 2020-21 as compared to last fiscal year.
Airtel CEO Gopal Vittal on 4GThe company had a Capex investment of Rs 25,359 crore on a consolidated basis during fiscal 2019-20 to ensure strong customer experience.

“Our guidance would be that Capex for the financial year would be lower,” Airtel India CEO Gopal Vittal said in an earnings call.

Airtel’s India business earlier said its Capex fell 15 percent to Rs 206,723 million in fiscal 2019-20. Airtel India’s Capex increased 132 percent to Rs 95,207 million in Q4.

Airtel has 194,409 network towers in March quarter vs 181,079 network towers in the same quarter last year. Airtel has 192,068 mobile broadband towers.

Airtel, the second largest 4G service provider, has 503,883 mobile broadband base stations vs 417,613 mobile broadband base stations at the end of the same quarter last year and 473,859 at the end of the previous quarter.

ARPU target

Airtel India CEO said that the telecom operator will achieve the target of average revenue per user (ARPU) of Rs 200-300 in the coming months.

Airtel, the third largest telecom operator in terms of mobile subscriber base, has achieved an ARPU of Rs 154 during the January-March quarter of 2020 after increasing wireless tariffs in December.

For comparison, Reliance Jio reported an ARPU of Rs 130.6 during the January-March quarter of 2020. Vodafone Idea is yet to release its financial report.

Mukesh Ambani-promoted Reliance Jio has added 17.5 million 4G customers to its network. Sunil Mittal-promoted Airtel has added 12.5 million 4G subscribers to its mobile network. Vodafone Idea has lost millions of customers in the recent quarters.

“We believe that an ARPU of Rs 154 is inadequate to turn a reasonable return on capital as a company and remain hopeful that ARPUs will get to Rs 200 in the short term and eventually to Rs 300 which is where it should be for a business like ours,” Airtel India CEO Gopal Vittal said in an earnings call.

The increase of Rs 19 in ARPU during January-March was without any tariff hikes and that is a good sign for growth. The difference between pre-paid and post-paid mobile phone customers is narrowing, and with customers shifting from 2G to 4G, there will be significant growth in future.

“The impact of the tariff hike of December 2019 came through in its entirety with no down trading. This reflects the resilient and quality customer base we have. Even more heartening, 4G customer additions saw continued momentum at 12.5 million,” Gopal Vittal said.

Airtel reported net loss after exceptional items at Rs 5,237 crore for the fourth quarter as against a net profit of Rs 107 crore in the same period last year. Airtel’s consolidated revenues grew 15 percent to Rs 23,723 crore from Rs 20,602 crore in January-March quarter last year.