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Bharti Airtel has said that it will shut its 3G services across India within this financial year.
The process has already been initiated in Kolkata – the first circle in the country where the company started its 4G services. “By September, 3G will be shut in 6-7 more circles,” a senior executive of the company said.
He added: “Between December and March, it will be shut in the entire country.” The company said it is seeing customers moving from 2G to 4G directly.
“We see an upgrade from people, from 2G to 4G. On the overall spectrum, we will have only 2G and 4G by April 2020. All our spectrum are on 4G other than the administered spectrum, which is on 2G, and that can be worked out based on the spectrum holdings we have,” said Gopal Vittal, Managing Director and Chief Executive Officer – India and South Asia, Bharti Airtel, in a post earnings call with analysts on Friday.
He said that the company requires a small amount of spectrum to run its 2G networks, which will be anywhere between 5MHz and 8MHz (in 1800MHz and 900MHz). “Everything else would really be sitting on the 4G band,” said Vittal.
The decision was made in light of depleting 3G users and more offers on the 4G network. It is also due to the competition as Reliance Jio has been offering only 4G services since its launch in September, 2016. However, Vodafone-Idea still offers its services in 2G, 3G and 4G.
As of June 30, Airtel has 9.51 crore 4G customers out of a total data customer base of around 12 crore people. According to sources, it has around 70 lakh 3G customers across the country.
On the capex, the company said it has lowered the investments as compared to last year, but will continue to invest in its network business.
“This is going to be a lower capex year than last year. Typically, you see a higher upfront capex in the first half of the year...it tends to be higher than the second half, but the capex will be moderate compared to last year,” said Vittal. On Thursday, the company reported a consolidated net loss of ₹2,866 crore for the first quarter ended June, the first time in the last 14 years. It had reported a net profit of ₹97 crore in the corresponding period last year.
Major challenges
According to analysts, lack of a counter to Jio phone and smaller 4G coverage [relative to Jio] remain key challenges for Airtel. However, it is making up for the gaps through strong execution. Network investments made over the last 12-18 months, smart content bundling and over the top (OTT) partnerships, and effective marketing are strengthening the perception that the company has a robust smartphone network.
“Bharti delivered a 2.3 per cent quarter-on-quarter (QoQ) growth in mobile revenues, diverging further from Vodafone-Idea Ltd (-4.2 per cent) and surpassing it to become the No 2 telco. Growth was driven entirely by average revenue per user (ARPU), which is up 3.1 per cent QoQ to ₹127 (VIL: ₹108), fuelled by smartphone upgrades (adoption of data bundles) and ARPU up-trading (laddered content bundles under Airtel-Thanks programme),” said a JM Financial analysis report.
Shares of Airtel closed at ₹343.45 apiece on the BSE on Friday, up 6.02 per cent from the previous close.
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