Early signs of tariff hike are encouraging; reasonable returns for industry only at Rs 300 ARPU: Airtel MD

The tariff repair will help create more operating leverage, where the return ratio or overall return on capital improves modestly, he said.

“Our business's return on capital is still hovering around 9% at the India level, which is abysmally low. Consequently, because we are a fixed-cost business, we are capital-heavy. It's not good enough, but it certainly improves from where it is. And once you get to Rs 300, there'll be reasonable returns in the industry,” he added.

Even before the tariff hikes by all three private telecom operators, Airtel managed to grow its top-line revenues through several interventions around ARPUs over the last two to three years. “Of course, the benefit of a repair in the tariff gives you a lot more operating leverage, where the return ratio, overall return on capital, improves modestly,” he said.

Vittal admitted that Airtel has seen some SIM consolidation at the lower end of the market, particularly around the 2G user base in the early weeks after the tariff hike came into effect.

“But the SIM consolidation that we've seen is modest, and I think only time will tell how that will play out,” he said, adding that the consolidation is in line with industry standards.

He, however, added Airtel hasn’t seen any customers moving to low tiered data packs following the tariff hikes.

“Yes, there is some reappraisal that happens during this period whenever tariffs go up, and there is some delay of recharges, all of that. My hope is that this will all unwind as we go through the quarter and let's see how that plays out,” he said.

Bharti Airtel reported on August 5 that its Q1FY25 net profit swelled 158 percent year-on-year to Rs 4,160 crore from Rs 1,612 crore in the corresponding quarter last year, beating Street expectations. This was mainly helped by exceptional items. Consolidated net profit before exceptional items for the first quarter was Rs 2,925 crore.