Airtel MD Calls for Urgent Telecom Tariff Repair in India

In a recent statement, Bharti Airtel's Managing Director, Gopal Vittal, highlighted the pressing need for tariff adjustments within the Indian telecom sector. During Airtel's Q4 earnings call, Vittal emphasized that the current tariffs are notably low on a global scale, necessitating a strategic overhaul to enhance return ratios. He underscored the importance of reaching an average revenue per user (ARPU) of Rs 300 to maintain competitive pricing while still being among the lowest worldwide.

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Vittal pointed out the critical role of tariff revisions in securing the industry's required returns. Despite acknowledging the limited immediate revenue from 5G services, he remains optimistic about its future impact on business returns. Airtel has explored various strategies for ARPU improvement, yet Vittal admits that industry-wide cooperation is essential for meaningful progress.

The discussion also touched upon consumer response to potential tariff hikes. Vittal recalled two previous tariff adjustments, noting minimal customer loss and suggesting that the benefits of such changes outweigh the drawbacks. He believes that as digital and mobile services become more integral to daily life, consumers are likely to adapt to price increases.

Addressing the challenges of 5G monetisation and the current pricing architecture in India, Vittal described the situation as problematic. He pointed out the disparity in what consumers could afford versus what they pay under unlimited plans. Comparatively, markets like Indonesia have tiered usage plans, which he sees as a more equitable approach. However, any shift in India would require a collective industry effort.

Airtel recently reported a 31% decrease in consolidated profit for the March quarter, primarily attributed to the devaluation of the Nigerian Naira. Despite this, the company saw a 4.4% increase in consolidated revenue from operations, with ARPU growing 8% year-on-year to Rs 209. This slight improvement from Rs 208 in December indicates a potential for positive momentum in tariff restructuring efforts.

The telecom giant's stance on tariff repair sheds light on broader industry challenges and the need for strategic changes to ensure sustainable growth. As Airtel navigates these complexities, its actions and those of its competitors will be closely watched for their impact on market dynamics and consumer experiences.