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Airtel Q2FY13 Concall Live

We’ve missed the initial bit of the concall but will be updating this post with highlights from the Q&A session.  Read about the results here.:

3:04pm: In last two years have been hesitant about major elasticity in Africa. In this quarter we did check and initial results are gratifying. We did that without dropping tariff. We will start bringing in more affordability in Africa. Traffic has gone up by 20% MoU s gone up from 120 to 138. Mainly in Anglo, Nigeria. We’ll launch in other markets by December.

Sanjay Kapoor – On declining EBITDA trends and metrics. We do have balanced measures external and internal metrics to look at our performance in a balanced manner. As far as declining profitability- let’s look at it not just from the perspective of EBITDA but from the investments we’ve made in India on data service. In Africa we have 60 million customers in Africa and have invested in capex. All investments have made an impact on profitability.

On Bangladesh and Sri Lanka – We don’t declare details but have been investing in Bangladesh and are gaining marketshare. In Sri Lanka we had gone behind a data building capability. Made investments in Eastern and Norther regin, and are gaining share in the market.

On revenue increase: Difficult to crystal ball gaze RPMs. But current economics suggest that tariffs should move northwards – would be non-prudent if we don’t correct prices. In future, prices need to correct themselves at a drastic level.

The number of customers that we’ve added have declined – minutes of usage is still at an average of 400 minutes – Rural India is still just 40% penetrated. Even with 950 m SIMs minutes of usage are not falling.

On cost of access charges: Essentially a mixed and a one time impact. We’ve to also look at the fact that Airtel business has a higher revenue this quarter.

On potential tariff hikes: Acquisition costs are high. Tariff vouchers are taking a major share from headline tariffs. We brought semblance about voucher rates. There’ll be better pricing in the future. Solution doesn’t lie in increasing headline tariffs.

On legal cases in Nigeria: Our operations are safe. The cases are in the Court and we’re optimistic, our stake is absolutely safe.

Acquisition: You should not be worried about us spending extra on acquisition. Our share of dongles and post paid are higher and revenues from them are higher, so acquisition costs decline. Gross adds might be negative but VLR is high. From 9th November a new acquisition process is being laid out by the DoT and CAFs will need to be signed by a company employee and not an outsourced distributor. Costs involved in expanding team will be offset by costs saved in paying external parties.

On regulatory uncertainty: Still a lot of unanswered questions on one time charges, refarming and retrospective charges.

On organisational changes in August: Any learning or change takes about an year but synergies are flowing in across all line of businesses. We have one chief for each geographies, giving us synergies of state, goto markets, distributors etc.

On data pricing: Sanjay Kapoor –  2G data pricing is not realistic, creating an arbitrage in 2G and 3G services. They should be alligned together. Even 3G tariff schemes are not sustainable, in medium to long run. Correction will take place. Giving high volumes in 3G packs is not sustainable. Data will be a fast growing line item, voice will grow in rural India.


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