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Battered by nearly Rs 16,000 crore loss, Airtel CEO hints at another round of tariff hikes

We continue to believe that average revenue per user (ARPU) needs to move up to 200 and eventually to 300 for a sustainable business model, said Bharti Airtel CEO Gopal Vittal.

July 31, 2020 / 09:44 AM IST

Bharti Airtel Ltd Chief Executive Officer (CEO) Gopal Vittal on July 30 hinted at another round of tariff hike. Airtel's average revenue per user (ARPU) needs to move to Rs 200, and eventually to Rs 300 per month, for a sustainable business model, he said. Vittal, however, did not specify when the hike in calls and data tariffs will be put in place.

Airtel’s ARPU in the last quarter was Rs 157, up from Rs 154 in January-March. The company had last hiked tariffs by up to 42 percent in December, reported LiveMint.

Bharti Airtel on July 29 reported widening of losses to Rs 15,933 crore for June quarter -- its fifth straight quarter of loss -- as the telco recorded an incremental provision of about Rs 10,744 crore towards statutory dues it owes to the government.

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"We continue to believe that ARPUs need to move up to 200 and eventually to 300 for a sustainable business model...I think tariffs have to go up, and the question really is the right timing for it. We believe that at some stage we should be ready for it, I can't comment on specifics of when," Vittal said.


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Meanwhile, Airtel's rival Reliance Jio registered a growth of 183 percent. Jio reported a net profit of Rs 2,520 crore for the June quarter 2020 against a profit of Rs 891 crore in the same quarter of last year.

The average revenue per user (ARPU) grew a significant 7.4 percent sequentially to Rs 140.3 per subscriber per month. This was much higher than the expected 3.5 percent growth. RIL reported a consolidated profit of Rs 13,248 crore for the first quarter of FY21.

Speaking at an earnings call post Q1 results, Vittal also said the indicative reserve price for 5G spectrum, as recommended by the regulator, is very expensive, unaffordable and does not support business case at those levels.

"Fundamental issue on 5G is that cost of the spectrum at Rs 50,000 crore for 100 MHz is way over the top for any kind of business model to work. Cost of spectrum needs to come down and ecosystem needs to evolve, and it is still early days," Vittal added.

Disclaimer: Reliance Industries is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd

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first published: Jul 31, 2020 09:44 am
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