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 investors’ call, Airtel was asked as to how Vodafone Idea’s hypothetical exit from India would affect it adversely, and to that Vittal said that, “They [Vodafone] will remain. India needs a three-player market. It’s a large enough marketplace to absorb three players. I think it will be good from all perspectives: investment, jobs, reputation, if Vodafone survives and stays. I have no doubt that that they will do so”.
- Customer base: Increased by 1.3% (3.6 million) sequentially to 283 million
- According to a document available on Airtel’s investor relations page, 94.4% of total customers were prepaid users. However, CFO, Badal Bagri clarified that it was a typo, and the actual number is 94.5%.
- Data customer base: 138.4 million (QoQ increase of 11.4%), of which 123.7 million users were on 4G data
- Vittal said that the reason 4G subscribers increased this quarter was because Jio had started charging IUC charges which potentially led to the addition in Airtel customers
- Monthly churn rate: Increased to 2.6% in Q3 from 2.1% in Q2
- Total voice minutes: Increased by 5.9% QoQ to 758,897 minutes, from 716,642 minutes in Q2
- Voice usage per customer: Increased to 898 minutes in Q3, from 848 minutes in Q2 (5.8% increase)
- Total MB on the network: Increased by 14.9% QoQ in Q3 to 5,547,223 million MB
- Data usage per customer: Went up to 13,928 MBs, compared to 13,116 MB in Q2
Digital TV services
- Customer base: Increased to 16.3 million from 16.2 million in Q2
- ARPU was constant at Rs 162
- Churn rate increased marginally from 1.6% in the previous quarter to 1.8% in Q3FY20.
- Number of districts covered under this service remained constant from last quarter at 639.
- Airtel’s music streaming app, Wynk, had over 60 million MAUs in the quarter, Bagri informed investors, and claimed that it had the highest number of DAUs compared to other music streaming apps in October 2019. He did not disclose which other apps he was referring to.
Homes services (such as broadband)
- Customer base increased marginally sequentially from 2.350 million to 2.352 million.
- However, it saw a 95% YoY decline in terms of net additions. In Q3FY19 Airtel had added 33,000 customers, and it could add only 2,000 customers this quarter.
- ARPU increased to Rs 787 in Q3 from Rs 777 in Q2.