After Bharti Airtel reported a 5.3% sequential growth to Rs 135 in Average Revenue per User (ARPU) in Q3FY20, CEO Gopal Vittal, during a call with investors, said that the telecom industry needs to move up to an ARPU of Rs 300 in the long run. At an ARPU of Rs 200, “we will barely have our head above the water in terms of return on capital,” he said, and added that the company will have have a 15% return on capital when the ARPU would be Rs 300. He also informed investors that Airtel’s "exit ARPU" for the quarter was about Rs 140. No increase in tariffs for a year? While announcing earnings for the December 2019 quarter, Vittal had said that the tariff hike in December 2019 was a “welcome step” in “repairing” the financial health of the telecom sector, and added that “tariffs must go up further for enabling the industry to invest in emerging technologies”. However, during the call, when asked if the company was planning to revise tariffs further in the current quarter, he said that Airtel will have to “wait and let this tariff increase settle down and sometime next year we will have to reassess and see whether the market can absorb a second round of tariffs increase”. He explained that increasing tariffs depends on “what happens with the rest of the competition,” and an “off kilter” increase in tariffs could lead potentially erode Airtel’s market share. On Vodafone Idea’s future: During the…
Industry needs to move up to an ARPU of Rs 300 in the long run; India needs a 3-player market: Airtel
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