In the recent earnings call for the second quarter ending on September 30, 2023, Gopal Vittal, the Managing Director and Chief Executive Officer of Bharti Airtel, provided valuable insights into the company's ambitious 5G strategy, 4G and network rollout plans. Gopal said Airtel is taking steps to ensure that its 5G network provides a superior experience for its customers. Let's look at what the leadership of Airtel has to say about the network and customer strategy.
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5G Strategy: Airtel's Bold Move
Gopal said Airtel took a very bold decision to go with the Non-Standalone (NSA) architecture for its 5G deployment. This strategic move was based on a clear vision of offering enhanced coverage, improved customer experiences, lower energy consumption, and reduced capital expenditure. According to Vittal, this strategy has indeed paid off in the marketplace.
Network Design: Engineering Excellence
Gopal said, "As a company, we have invested very smartly and designed our network based on very sound network engineering, resulting in incredible coverage over 5000 cities and about 20,000 villages. We are now delivering decisively the 'best experience for customers on 5G.'"
Standalone vs. Non-Standalone: Airtel's Approach
Vittal clarified Airtel's stance on the Standalone (SA) architecture for 5G, indicating that they will make the transition when it becomes necessary and when additional benefits become evident. However, at present, the company sees no compelling reason to shift to SA architecture.
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Mid-Band Spectrum Advantage
Regarding spectrum, Gopal said Airtel holds a unique advantage over its competitors in India due to its access to mid-band spectrum. This advantage allows Airtel to work effectively with NSA, providing a superior customer experience while keeping capital expenditure controlled.
This strategy was previously explained by TelecomTalk in the story linked above.
Strategic Network Investment
Airtel's strategy is focused on staying ahead of market and customer needs, all while avoiding unnecessary capital expenditure. The primary goal is to provide the best user experience possible, rather than laying claim to the title of the "largest rollout."
"Airtel will keep a step ahead of the market and customer needs, but will not put unnecessary capex to make a claim of our "largest rollout." Instead, we will focus on where the market is and deliver the best experience to our users," said Gopal.
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Tariffs and Customer Segmentation
"On tariffs, we've been very clear that we don't believe in a higher 5G tariff, but we will continue to strive for an overall hike in tariffs while keeping our service most affordable and delivering high-quality service."
Regarding tariff plans, Airtel does not intend to impose higher tariffs specifically for 5G services. The company acknowledges the diverse needs of customer segments and plans to offer a customized approach.
Growing 5G Customer Base
Despite not currently monetising 5G due to unlimited data plans, Airtel's 5G network and customer base continue to expand. Airtel now has about 55 million unique customers on its 5G network across India.
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Rural and Urban Expansion
The Airtel CEO said the company looks at opportunities through two key lenses - rural and urban areas (150 cities). In rural regions, the company is deploying over 30,000 sites to extend coverage to around 60,000 villages to win the share of 4G net additions. In urban areas, Airtel has decided to stop investments in 4G capacity expansion after the 5G rollout, leading to significant traffic offloading from 4G to 5G sites.
"These 30,000 sites are now in the process of launching. Almost 66 percent of our 5G sites now offload 4G traffic, and this is one of our key factors in our prudent capital allocation," Gopal explained.
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Need for 5G Applications
Vittal emphasised the need for more applications that can harness the benefits of 5G technology. Presently, fundamental use cases for 5G are scarce not only in India but also globally. The apparent high usage of 5G can be largely due to its cost-free nature.
Market Approach
In response to a question about whether Airtel is worried when looking at the global scenario as the 5G rollout has significantly decelerated, Gopal said, "No, I'm not worried. I'm glad because I think everybody is realising that this is a long haul."
Airtel's CEO made it clear that the company is not in a race to claim the largest or fastest 5G rollout. Instead, the company intends to deploy 5G where it makes strategic sense, aligning its efforts with device availability and the need for 4G capacity offloading.
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Market Share Growth
Airtel attributes its ongoing market share growth to its diligent rural expansion initiatives and the ability to exceed action standards related to revenue per site and operating cost per site.
