Pawan Kumar
Airtel to trim 4G capex
On Wednesday, Bharti Airtel said that the business would reduce its investments in 4G capacity and shift them to 5G. This comes after the business noticed a shift away from 4G towards increasing traffic on 5G at specific locations. On a specific site with 5G, around 25–35% of traffic is already shifting from 4G to 5G if you look at a single client. Accordingly, one of the things we are looking at is to squeeze out our 4G capacity investments,’ said Gopal Vittal, MD & CEO (India and South Asia), in the post-earnings call with investors. 5G might potentially be a capacity offload of 4G.
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Typically, Bharti spends roughly Rs 35,000 crore annually on only its India operations. Although it does not anticipate a general increase in capex in the upcoming years, it may frontload some investments in order to facilitate the implementation of the 5G network.
The fascinating thing, said Vittal, is that using NSA (non-standalone) technology, commercial trials are providing 30% more coverage than they would have if using SA (standalone architecture).
Currently, Airtel is implementing 5G in NSA mode, which means that 5G will be utilised for quicker data transfers while the existing 4G network will continue to be used for calls and initial connection establishment. The NSA mode is economical. The 5G network is separate from the 4G network in SA, where Jio is now operating.
According to Airtel, who attributes its success to quality customers and increased network utilisation, 5G users can access speeds of up to 500 Mbps.
Bharti is also expanding its reach in rural areas. ‘Airtel is absent from 60,000 high-potential villages. Although I believe that now is the ideal moment for us to explore these areas, we could have left earlier.
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Currently, Jio has a significant rural presence, and Airtel believes that 4G has the ability to boost its market share. It has less to do with 2G, which is offered at a lower price point, and more to do with 4G users, according to Vittal.
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The telco recently increased its base rates in 17 circles by 57% to Rs 155. Bharti stated during the earnings call that it anticipated a greater rate of churn in the markets of Odisha and Haryana. The turnover has been somewhat less, though.
‘As we have always indicated, we can’t do this unilaterally and if we do it and lose market share, then to draw that share back would really be significantly more difficult,’ Vittal said in reference to the larger rate increases in 4G. It was a calculated risk in the case of entry-level plans. He repeated his desire to raise Arpu to Rs 300 and expressed persistent concern about the lesser returns on capital utilised.
