Bharti Airtel Chief Executive Officer, Gopal Vittal is not worried about consumer acceptance of tariff hikes in a rising inflation environment as telecom is an essential service, said JP Morgan in a note read by ET Telecom. Airtel would be looking at tariff hikes to primarily monetise 5G services. The telco wants to increase the average revenue per user (ARPU) figure to Rs 300 in the medium-term. Since telecom services are essential, it doesn't matter even if the tariffs are going up; consumers will still pay for them. Vittal made the comments at a recent JP Morgan investor summit.
Airtel to Go for Tariff Hikes in FY23, Industry Seems Positive on it
Vittal said that the price repair in the industry is still unfinished. Airtel, as a company and brand, has always seemed proud of its higher tariffs by marketing its services as premium. BNP Paribas, an international banking group, is also confident about Airtel going for a tariff hike in FY23 to recover its sizeable investments in the 5G spectrum auctions.
Airtel's short-term ARPU goal is Rs 200. Currently, the telco's ARPU stands at 183, slightly far from the short-term goal of the company. Airtel had already said earlier this year that it would go for a tariff hike. Vodafone Idea, another private telecom company, would be looking to do the same as well.
Airtel spent over Rs 43,084 crore in the recently concluded spectrum auction. The telco plans to roll out 5G services in October 2022. Airtel will go the NSA (non-standalone) route with its 5G networks. Jio, its arch-rival, will go for 5G SA across India.
Vittal, without taking the name of Jio, said only 25% of the existing phones would be able to support carrier aggregation between 700 MHz and 3.5 GHz bands for adequate 5G on SA (standalone) networks. For the unaware, Jio would be deploying 700 MHz spectrum for the 5G rollout.