Airtel intends to roll out 5G network in key cities at the earliest: Sunil Mittal

Bharti Airtel (Airtel) Chairman, Sunil Bharti Mittal, said that the ₹21,000 crore capital raise that the company announced on Sunday will help improve its position and simultaneously provide the fuel to accelerate investments across several parts of its portfolio to drive for competitive and profitable growth.

They will include 5G auction, roll out of fibre to prepare the network in time for 5G launch and accelerate the company’s investment in the fast-growing data centres.

“Under this backdrop, the Prime Minister has called upon all players in the industry to step up their efforts in accelerating India’s growth, and exhorted the industry to take greater risks and participate wholeheartedly in building India’s future,” Mittal said in an investor call on Monday.

“The PM’s vision of a ‘Digital India’ holds great promise and it’s a once in a lifetime chance for a handful of players in India to build the infrastructure required to fulfil this dream. It is with this in mind that Airtel has decided to accelerate the building out of a number of vital pieces to serve the country and, at the same time, secure its leadership role in the market place,” he added.

The Board of the company, on Sunday, decided to raise fresh capital by way of a Rights issue. The company has pegged the rights-entitlement ratio at one equity share for every 14 equity shares held by eligible shareholders as on the record date. Further, the Board constituted a ‘Special Committee of Directors’ to decide the other terms and conditions of the Issue including Issue period and the record date.

“This capital will help improve the leverage position for the company and simultaneously provide fuel to accelerate investments across several parts of our portfolio to drive for competitive and profitable growth,” he said.

5G auctions

Mittal said 5G auction are expected to happen next year and Airtel, as a leader, intends to roll out 5G network in key cities ‘at the earliest’ to be able to provide the benefits of the new-age networks to its customers, especially heavy users and industrial applications.

“Handsets which are 5G-enabled have started to make their way into India and Airtel expects that by the time 5G networks are built, there will be large number of its handsets ready to use the services,” Mittal noted.

Roll out of fibre

He said that the fund raised will also be utilised to accelerate the rollout of fibre and also have millions of additional home passes of fibre-to-the-home (FTTH) for home broadband.

“We will accelerate our investment in the fast-growing data centres business given that India is emerging as a top choice for hyperscalers to set-up new capacities… we are conscious of our current leverage ratio which we believe is comfortable,” Mittal said, adding that it was not a sentiment shared by all. He noted that he was conscious of the same and of not further loading the company with any additional debt, especially as the above opportunities need their outlays.

“The Board approved the fresh capital raise which will allow the company to have a better leverage ratio, stronger and earlier access to building new market opportunity across, 5G, fibre and homes, and importantly give us the needed elbow room and fuel, to fearlessly accelerate its mission,” he said.

The Rights issue has been designed such that the money will be called upon as and when required and closely monitored for utilisation, he further said, adding that the government has also been asking the industry to step up investment in the digital infrastructure. To this, Mittal also highlighted the concerns of telecom operators on issues like high taxes and levies, hoped for some relief.

“We have been also urging the government to attend to some pressing issues inhibiting continued investments in the sector given the negative to low returns. The taxes on this industry remain high. For every ₹100 of revenue, ₹35 go in various forms of levies. We hope that as we step up and do our part, the government will also favourably look at some of the genuine demands of the industry enabling a multiplier effect and positive outcome,” Mittal added.

Mittal also estimated that the industry’s average revenue per user (ARPU) would reach ₹200 per user per month by the end of the current financial year and eventually move to ₹300. “I remain confident that we have seen the worse now in terms of tariff wars…we are about mid-point now at ₹145-150 and this will tend to start towards ₹200 by end of this financial year,” he added.

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