Millennium Post

Airtel plots to reap more profit via discount cuts, tariff hikes

‘I think we will continue to see an opportunity to raise voice realisation through continued cut back of discounted minutes... We will deter to touch headline tariff but at some point there may be some opportunity to raise headline tariffs,’ Bharti Airtel Managing Director and CEO (India & South Asia) Gopal Vittal told reporters here. The current levels of voice pricing are absolutely unsustainable with input costs going up, he added.

‘With the rising cost of diesel, network cost, the cost of spectrum, the cost of fibre, the cost of actually rolling out networks, I think there is no question but to reduce discounted minutes,’ Vittal said.

Airtel has recently increased mobile services rates of both Internet and voice calls under certain schemes. It has been consistently cutting down freebies for the last few quarters in order to increase voice realisation and improve profitability.

‘It has been happening over the last four quarters. If I look at secular basis over the next couple of years, there is no other option but for voice realisation to go up,’ Vittal said.

He added that due to the efforts of the company, the voice realisation per minute has improved to 37.07 paisa as compared to 35 paisa four quarters ago. The company on Wednesday reported a 89 per cent rise in the fourth quarter net profit at Rs 962 crore on account of higher revenue from data business and rise in mobile services rates. The total revenue for the fourth quarter of 2013-14 was up 13.5 per cent to Rs 22,219 crore as compared to Rs 19,582 crore a year ago.

For the full 2013-14 fiscal, the net profit rose 21.8 per cent to Rs 2,773 crore as against Rs 2,276 crore in previous year. Revenue was up 11.5 per cent to Rs 85,746 crore. Vittal said there is immense competition in the market and going forward, consolidation will take place in the sector that will leave 5-6 mobile operators in the country. Bharti Airtel acquired Mumbai’s oldest operator  Loop Mobiles in February. After the buyout, Airtel would get to have Loop Mobile’s 3 million subscribers ould get to join Airtel’s 4 millions. Asked about about the senior level exits from the company, Vittal said 80 per cent of the vacancies created by these people have been filled internally.

‘Most of the people have got leadership roles in other companies, so it’s not an attrition story but a growth story,’ he added. Bharti Airtel will make capital expenditure in the range of $2-2.2 billion for the financial year 2014-15.

Bharti Enterprises Group CFO Sarvjit S Dhillon said there is more clarity on the regulatory front now, which is a good sign for the industry. He said there will be consolidation in the industry in the next few years.

‘The marketplace in India is not just competitive, it is hyper competitive, you know there is no market in the world where you see anything like 10-12 operators. In the next few years, this has to consolidate, maybe 5-6 operators in the country,’ Dhillon said.

The company's African operations, however, saw muted growth in the fourth quarter of FY'14. ‘The Q4 was not very exceptional quarter but the good thing is that data is picking up in Africa,’ Bharti Airtel MD and CEO (Africa) Christian de Faria said. He said the company is growing faster than competition in the region and is number one in 11 markets and number 2 in 4.

Faria said Airtel has got 3G in 16 countries except Nigeria, where it is likely to get the licence in the next few months. He added that the company is addressing the issues in Africa in a systematic way.
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