“Unfortunately, in India today, 5G is effectively free data, so there is no real monetization on the consumer side. Yes, fixed wireless access.” [like Airtel Xtreme AirFiber] There is some potential for monetization, but it is very modest in the grand scheme of things considering the capex behind 5G,” said Gopal Vittal, Managing Director, Bharti Airtel, on February 6, 2024. This was stated at the company’s financial results conference on the same day. For the quarter ended December 31, 2023, Airtel made a capex of his Rs 20,000 crore. 775.6 billion in India, with a focus on “5G, rural expansion, fiber deployment and data centres”. Vittal said private 5G networks exist for enterprises and the company is deploying his 5G network for four to five such purposes, but this is a small part of the overall monetization. said.
Despite the lack of monetization, Vital said he does not believe there will be differential pricing for 5G. He said that if you have 100 customers and offer a product at two different price points (e.g. Rs. He explained that it is highly sexual. As such, Vital said monetization needs to focus on repairing overall rates, adding that free data on 5G plans is acting as a deterrent to monetizing 5G services. Interestingly, the Economic Times reports that Reliance Jio and Bharti Airtel are expected to scrap their unlimited 5G plans and charge at least 5-10% more for 5G services compared to 4G. has been done. Vittal’s comments during the earnings call lend credence to claims that Airtel customers may soon lose access to free 5G data.
What portion of Airtel’s user base has 5G devices?
The company has approximately 65 million users on its 5G network. “The total contribution of his 5G users to overall smartphones is even lower, around 15-16%. By March 2025, we expect about 25% of the industry’s smartphones to be 5G-enabled.” he says Vittal. He explained that around 60-80% (depending on average price range) of smartphones entering the Indian market will be 5G-enabled.
Increased average revenue per user:
During the quarter, average revenue per user (ARPU) increased to Rs 208 from Rs 193 in Q3 FY23. “This improvement is actually due to three key drivers that continue to be effective: upgrades from feature phones to smartphones, and upfront pricing.” Postpaid upgrades, wallets combined with data monetization and international roaming. increase in the share of the market,” Vittal said. He added that the company’s plan to upgrade to higher value plans is working well and is contributing to ARPU growth in the absence of price hikes.
Airtel added 28.2 million 4G/5G data customers to its network last year, increasing its customer base by 13% year-on-year to a total of 244.9 million. He added 359,000 customers in the company’s residential business (which includes home broadband, direct-to-home subscriptions and fixed-line services). Vittal said the segment had eased as there was a “peelback of the Rs 199 entry-level plan, so we discontinued that plan and that had some impact”. He added that this is a healthy impact as APRU from customer acquisition is increasing.
Key insights from financial statements:
Airtel’s stance on 2G: Reliance Jio, in its recent filing with the Telecom Regulatory Authority of India (TRAI), claimed support for the closure of 2G and 3G services. When asked about Airtel’s view, Vittal explained that there are different types of customers who use 2G, including illiterate, low-income groups and elderly groups who struggle with smartphones. “Currently, the contribution of 2G to our business has become very small, roughly 17 odd per cent, and single digits in markets like Gujarat, Maharashtra, Kerala, Mumbai and Delhi, but it is still a fairly high contribution in the market. It can be seen in Bihar, UP, MP, Chhattisgarh etc. So I think we’ll see a quarterly move towards 2G, but a small number of users will take a little longer,” Vital said. He said that in the next few years he will see 2G start to disappear, but at that stage Airtel can decide what it wants to do about the 2G service.
Airtel Black contributes 47% to broadband growth. 47% of the net customer addition to Airtel Broadband came from its integrated service, Airtel Black. “This integrated plan will help us offer Airtel’s multiple services to our customers. This will reduce churn and increase average revenue per account,” Vittal explained. The company is focused on intensifying its sales and marketing efforts to switch more broadband users to its Airtel Black.
Airtel Xtreme has over 5 million paying customers. Airtel over-the-top (OTT) aggregator, Xtreme, also recently added the following streaming services to its platform: aha, ALT Balaji, Fan Code, and Play Flix.
Airtel’s fintech business performance: As of this quarter, Airtel Payments Bank has a user base of 58.6 million. Deposits with the bank have increased by 51% over last year and the annualized return is now around Rs 200 crore. 190 billion.
Airtel Finance (which offers credit cards and loans) has also expanded. “We are currently disbursing loans at the following run rates: [Rs.] compared to $620 million per quarter. [Rs.] $550 million in the second quarter [which ended in September 2023]” Vital said. The company is focused on offering large ticket loans, which is reflected in the average loan size of Rs 110,000, Vittal said. The company plans to further expand Airtel Finance by offering gold loans and built-in insurance.
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