On expected lines, the country’s largest telecom operator Bharti Airtel on Wednesday said that it will continue to cut discounted minutes and may raise tariffs to meet rising costs as the market market reaches saturation in terms of tariff cuts.
“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,” said Bharti Airtel Managing Director and CEO (India & South Asia) Gopal Vittal.
As already reported in The Pioneer that given the fund crunch and high licence fee funding as well as rising roll out expenditure, the debt ridden telcos, have been pushed to put a stop on discounted minutes or free talktime as well as halt any further reduction in tariff cuts or rather raise it as the market had saturated. 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 has already reported a 89 per cent rise in the fourth quarter net profit at Rs962 crore on account of higher revenue from data business and rise in mobile services rates.
The total revenue for Q4, 2013-14 was up 13.5 per cent to Rs22,219 crore as compared to Rs19,582 crore a year ago. For the full 2013-14 fiscal, the net profit rose 21.8 per cent to Rs2,773 crore as against Rs2,276 crore in previous year. Revenue was up 11.5 per cent to Rs85,746 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. Asked 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 its not an attrition story but a growth story,” he added. Meanwhile, industry experts hold that it has been observed that in the last five quarters, the telecom industry has benefitted from reduced competition that has allowed operators to raise effective call rates by reducing free minutes on calls. This trend has helped operators improve their key parameters such as average revenue per user (ARPU).