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Airtel rues ‘exorbitant’ 5G spectrum pricing; urges govt to review price of radiowaves

Telecom operator Bharti AirtelMay 31 said base price of spectrum recommended by the regulator are “exorbitant” and unaffordable, as it urged the government to review the price of radiowaves to set the stage for an aggressive 5G play. “These prices are exorbitant given that the state of 5G ecosystem, is still nascent. So, we would hope that the Government brings down prices of spectrum and reserve prices of spectrum, and that is the stage we would look seriously at 5G,” the company’s MD and CEO, India and South Asia, Gopal Vittal said during an earnings call.

Vittal said the base prices recommended by the Telecom Regulatory Authority of India (Trai) places the radiowaves in the ballpark range of Rs 50,000-55,000 crore for 100 MHz of spectrum.

“5G requires large quantities of spectrum. If you have 40 MHz, you don’t get 5G type requirement, so in terms of speed and latency you require large chunks of spectrum. Clearly, these are prices we can’t afford,” he said.

The management of Bharti Airtel, present at the earnings call, said the competitive intensity has stabilised to the extent that the company has not seen a reduction in tariffs.

But it conceded that the marketplace continues to be brutal, given that the Average Revenue Per User, which used to be about Rs 200, has slipped to Rs 125. The capital expenditure of the company had already peaked in FY19 and the current financial year would see a moderation in capex, the company said but did not provide a guidance for the same.

Airtel had, earlier this month, announced its earnings for the fourth quarter and FY19 but it had not issued the customary press statement, detailing the management commentary nor provided average revenue per user and other key metrics tracked by analysts, owing to the mega rights offer that was open at that time.

The company on Thursday said that its average revenue per user rose by 6.5 per cent to Rs 123 in the January-March quarter which is still not at “sustainable” level for the sector. The company had ARPU of Rs 116 in the same period a year ago.

“The year has ended on a positive note with 4th quarter ARPU increasing to Rs 123 though still not at sustainable levels for the industry,” Vittal had said in a statement on Thursday.

The company’s loss from India mobile services business more than doubled to Rs 1,377.8 crore in January-March 2019 compared to Rs 482.2 crore loss in the same period previous fiscal.

Bharti Airtel had, on May 6, had reported a surprise 29 per cent surge in March quarter net profit as exceptional income gains and Africa business helped offset losses in India mobile services operations.

The company — whose profitability has been battered by intense price competition posed by richest Indian Mukesh Ambani’s Reliance Jio — earned a net profit of Rs 107.2 crore in January-March against Rs 82.9 crore it earned in the same period of the preceding fiscal.

This was the first rise in profit after several quarters for the company. Revenue soared 6.2 per cent to Rs 20,602.2 crore for the three months ended March 31, 2019.