Bharti Airtel (Airtel) said on Tuesday, that while there has been a clear rise in average revenue per user (ARPU) on an ‘organic basis’, the “real improvement” in these metrics will come from tariff repair, especially from 5G monetisation.

“We have seen improvement in ARPU in the absence of tariff, and some quarters it’s a little higher, some quarters it’s lower...there is clearly a movement up in terms of ARPU on an organic basis, given the levers that I spoke about, feature phone to smartphone, postpaid data monetisation, international roaming, shifting to higher price plans, etc.,” Gopal Vittal, Managing Director and Chief Executive Officer, Airtel, said during the company’s Q3 investor call.

But this will be a modest improvement, he said, adding that the “real improvement will come only if there is tariff repair. And as I mentioned before, it’s not a question of if it will happen; it’s more a question of when it will happen.”

‘No monetisation’

“Unfortunately, 5G has become really about free data today in India, so there is no real monetisation on the consumer side. Yes, fixed wireless access will give you some ability to monetise, but it’s really modest in the overall scheme of things, given the capex that’s gone behind 5G,” the Airtel Chief said.

He said there’s also private 5G networks for enterprises, and Airtel was working with a large auto ancillary manufacturer, handset player, and an industrial equipment player, so some of these companies are looking to deploy private 5G networks.

“We have indeed deployed about four or five of such projects. But again, you will appreciate that this is a smaller part of the overall monetisation. So when you look at monetisation, this is not meaningful in any stretch, in any sense of the term...So, I think monetisation is about overall tariff repair, but free data is obviously a headwind on any sort of monetisation as far as 5G is concerned,” he remarked.

Airtel on Monday, declared a consolidated net profit of ₹2,442 crore for the third quarter ended December 31, up 53.7 per cent y-o-y as compared with ₹1,588 crore in the corresponding period in the last financial year. Its revenue for the quarter in review also grew by 5.8 per cent y-o-y to ₹37,900 crore as against ₹35,804 crore in the October-December quarter of 2022.

The company’s ARPU was recorded at ₹208 compared with ₹193 in the same quarter last year and ₹203 in the second quarter of this financial year.

“This improvement is really due to three key drivers that continue to kick in. Feature phone to smartphone upgrades, prepaid to postpaid upgrades, and driving share of wallet through a combination of data monetisation and international roaming, our premiumisation agenda to upgrade customers to higher value plans has been working well and contributing to output growth in the absence of tariff hikes,” Vittal said.

On the question of shutting down 2G users in the future, Vittal said that the 2G customers will continue for some more years as there are still different kinds of 2G users.

“There are people who don’t want to shift to smartphones; there are users with lower incomes; and there are older people who struggle with smartphones, so it’s a combination of various things. The contribution from 2G to our business is still quite strong, with a ballpark figure of around 17 per cent with contributions from circles like Bihar, Uttar Pradesh, Madhya Pradesh, Chhattisgarh, etc.,” Vittal added.