Airtel plans telecom Capex of $3.2 billion in fiscal 2015, announces 4G, 3G strategy

Indian mobile service provider Bharti Airtel said it would invest $3 to $3.2 billion towards Capex (capital spending) for telecom infrastructure in fiscal 2015.

The $3.2 billion Capex plan indicates a substantial increase comparing with previous years. It will focus on 3G and mobile data networks. 4G will not be targeted for mass markets, Airtel India CEO Gopal Vittal said during a recent analyst meet.

Out of $3.2 billion, $700 million to $800 million would be for Africa. This indicates that the telecom operator will not be increasing its Capex in Africa to take on Etisalat and MTN.

The Capex of Bharti Airtel, which is betting big on 3G and not 4G at present, has decreased to $1,747 million in fiscal 2014 as compared with $2,323 million in fiscal 2013 and $2,679 million in fiscal 2012.

Airtel 4G strategies

Telecom analysts say Bharti Airtel has focused on hotspot strategy with 2300 MHz spectrum. Current indications are that 1800 MHz FD-LTE 4G spectrum will also be used for limited coverage. 1800 MHz is expected to provide more coverage layer, while 2300 MHz band will provide a capacity layer.

Because TD-LTE 2300 spectrum has limited propagation, Bharti Airtel has launched this in four cities Bangalore, Chandigarh, Pune and Calcutta.

Gopal Vittal also indicated about the lack of cost effective handsets available for 4G subscribers. He referred Apple iPhone 5s, which was launched in Bangalore for 4G voice services, and LG LTE smartphones. A TD-LTE phone costs around Rs 50,000.

But his main concerns are about lack of phones available in the market. The Indian LTE market is expecting that there will be more smartphones available after the massive roll out of 4G by China Mobile.

“The whole issue is how fast will devices come in and so on and so forth and that is something that we will need to look at,” said Gopal Vittal, managing director and CEO (India and South Asia) – Bharti Airtel.

Airtel would also be looking at carrier aggregation roadmap. “The carrier aggregation roadmap is clear at this point, the technology still does not permit FD and TD carrier aggregation, but it is a matter of very short time by when it will be available,” Vittal added.

Airtel growth
Why Airtel 3G will get more focus

Airtel says 3G will really be the leading contributor to incremental data growth and the reason for that is the availability of 3G smartphones. In Q4 fiscal 2014, Airtel had 138,755 sites as compared to 133,778 sites in Q3 FY 2014. Out of the total number, 3G represents 22.6 percent with 31,301 sites as compared to 28,179 sites in the previous quarter and 24,573 sites at the end of previous year.

“Today, you can get a 3G device at about Rs 3,500 to Rs 4,000. Over a period of time the same will happen to 4G but it is all about how fast the device ecosystem grows. Today, you find a TD handset available at about Rs 50,000 with China mobile planning the sort of networks they are on TD-LTE chances are that in the next 18 months you could have a $100 device but do not forget by then your 3G device will be at $35 to $40,” Vittal said.

He said over the next three year period both 3G and 4G will coexist. 3G will be much larger much more mass and 4G will probably be more niche and more for high value customers.

Airtel mobile data

Earlier, Airtel said its mobile data revenues rose 96.3 percent to Rs 63.2 billion in fiscal 2014. During the fourth quarter mobile data revenues increased 93.4 percent to Rs 19,001 million as compared to Rs 9,825 million in the corresponding quarter last year.

Mobile data revenue now represents 8.6 percent of the total revenues compared to 5.0 percent in the corresponding quarter last year. Airtel mobile data contributed to 34.8 percent of the overall incremental revenue of Airtel.

Airtel’s data ARPU increased 43.4 percent to Rs 79 during the fourth quarter as compared to Rs 55 in the same quarter last year.

Baburajan K
[email protected]

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