A day after the board of approved a Rs 21,000-crore rights offering primarily to fund its dues linked to adjusted gross sales (AGR), chairman Sunil Bharti Mittal pressed for tariff hike because the only way forward for the telecom industry.
“We have done our bit during a limited way, we’ve run out of patience and that we cannot be an outlier all the time,” Mittal said at the company’s investor turn Monday, while reiterating that the corporate wouldn’t recoil from raising tariffs.
The company stock reacted positively on Monday, ending 4.44 per cent up at Rs 620.35 on BSE.
The company had slightly tweaked tariff plans recently without impacting an outsized chunk of its subscriber base. No telco has initiated any significant rate hike after December 2019.
Indicating a target for a tariff hike, Mittal said the monthly ARPU (average revenue per user) should touch Rs 200 by the top of the present fiscal, projecting a 40 per cent rise from the present Rs 146 a month. Eventually, it should go up to Rs 300 to serve the purchasers well, he said.
Referring to the recent increase in its minimum prepaid plan from Rs 49 to Rs 79, he said it can go further up to Rs 99. “But when will we be ready to roll in the hay , we do not know. we’ve to depend upon economic process and that we are observing them carefully,” he added.
On competition, Mittal maintained that the world should have a minimum of three players albeit the third one is weaker than others.
Responding to Airtel’s fund raising step, many analysts expressed surprise. Motilal Oswal in its report said, “This capital raise is surprising because the management in its previous couple of calls stated that its leverage and liquidity position is comfortable and self-sustainable, with healthy free income generation altogether verticals, thus indicating no additional capital requirement.”
Historically, the management has given a really clear capex outlook, with a yearly guidance. In fact, tracing back to the height capex intensity in FY16, the management announced a three-year capex plan called ‘project leap’, providing detailed clarity about its capex plans, it said.
Mittal said within the analyst turn Monday, ‘’it would be a grave error if we stayed with business as was common .’’ He added, ‘’we are loaded with enormous debt, totally on account of the AGR dues, and leverage in our company that bothers us… But at an equivalent time we are comfortable that we will do business as was common .” The company’s net debt at the top of June quarter was up 7.5 per cent sequentially to Rs 1.60 trillion. it had been up 30.7 per cent year on year.
On the difficulty of levies that are imposed on telecom companies, he said, “for every Rs 100 of revenue, Rs 35 goes in various sorts of levies. We hope that as we intensify and do our part, the govt also will favourably check out a number of the real demands of the industry, enabling a multiplier effect and positive outcome.”
On 5G auctions expected next year, Mittal said the corporate intended to roll out a 5G network in key cities at the earliest to be ready to provide the advantages of the new-age networks to its customer, especially heavy users and industrial applications. He however urged the govt to enhance the 5G spectrum reserve price.
“It is wealthy , 15 per cent of the market is already 5G enabled,” he added.
The company plans to accelerate the rollout of fibre to organize the network in time for 5G rollout.
The focus would get on digital infrastructure, he said, adding India had entered a phase of exponential growth in its digital economy. pertaining to Prime Minister Narendra Modi’s call to India Inc to require more risks and intensify India’s growth, Mittal said the Digital India vision holds great promise.