'Free data a headwind against 5G monetisation': Bharti Airtel MD Gopal Vittal

Unlimited free 5G data acts as a headwind against monetising the next-generation technology, Bharti Airtel managing director Gopal Vittal said. He does not see differential pricing for 5G as prudent, because only a fraction of the customers will subscribe to higher-priced plans.

India’s second largest telecom operator has more than 65 million 5G subscribers, Vittal said, adding that while it is growing, the overall contribution of 5G users to the smartphone base is still low at around 15-16%. However, Vittal expects the industry will have 25% of the base 5G enabled by March 2025.

He was speaking during the company’s fiscal third-quarter earnings call with analysts Tuesday.


“Unfortunately, 5G has become really about free data today in India. So, there is no real monetisation on the consumer side,” Vittal said.

Market leader Reliance Jio said last month that unlimited data to its 90-million-plus 5G subscribers had hurt revenue growth, despite a spike in data usage and record customer additions.

“Yes, fixed wireless access will give you some ability to monetise, but it’s really modest in the overall scheme of things given the capex that’s gone behind 5G,” Vittal said. He added that despite working with a few large enterprises for private 5G services, they are still a small part of the overall monetisation and are not meaningful enough.

Airtel is working with a large auto ancillary manufacturer and a handset company in South India, and another big player in industrial equipment in the west, to deliver private 5G networks, Vittal said.

“I think monetisation is about overall tariff repair. Free 5G data is obviously a headwind on any sort of monetisation,” he said.

The telecom operator posted a 2.5% sequential increase in average revenue per user (ARPU) to Rs 208 in the third quarter, beating industry estimates, on the back of 2G to 4G migration of customers, post-paid data monetisation, international roaming and subscribers shifting to higher-priced plans.

“But this will be a modest improvement. The real improvement will come only if there’s tariff repair…It’s not a question of if it will happen, but more of a question of when it will happen,” Vittal said.

Despite the absence of headline tariff hikes, Airtel’s India revenue rose 11% from a year earlier in the December quarter, faster than Jio and Vodafone Idea, with the ARPU gap with the rivals widening. The telco also posted a sharp 54% jump in net profit.

The company’s capex stayed flat, with Vittal indicating that the current fiscal year will see an elevated year of capex due to the ongoing 5G rollout expected to be completed by March 2024, and substantial network rollout in rural areas.

“I think the next (fiscal) year will moderate in terms of capex,” Vittal said. He added that the capex to revenue ratio will depend on tariff repair.

Moderating capex, coupled with improving operating income, has resulted in Bharti Airtel’s India business generating $1.9 billion in free cash flow in the first nine months of FY24, most of which the company has utilised towards prepayment of high-cost spectrum debt, Goldman Sachs said in a research report.

Airtel said the cash flow generated will be used in the next four to six quarters in deleveraging its balance sheet, before framing a dividend policy.

The company added that nearly all of its debt is in India. A bulk — around 50-55% — of the India debt is with the Department of Telecommunications, and around 30% is for financial obligations.

The company has paid back Rs 16,300 crore in spectrum payments so far in FY24, Morgan Stanley said.