NEW DELHI: Bharti Airtel plans to spend more than Rs 32,000 crore in the next two fiscal years to expand its network and gain 3-4 percentage points in revenue market share at the expense of struggling smaller operators besides companies such as Idea Cellular and Vodafone India, which are in the midst of a complex merger process.
India’s top telco is however unlikely to drop prices further in a bid to protect its average revenue per user (ARPU) — a key indicator of financial health — and expects rival Reliance Jio to gradually raise its own rates as smaller players fall by the wayside, a senior executive said. Jio started commercial services last September with an aggressive pricing strategy that has hurt incumbents amid consolidation in the industry.
Airtel’s investment will help expand its data network and excludes money that may be spent on spectrum purchases. It’s open to buying airwaves in the 800 Mhz band — which it has stayed away from so far — through auctions or trading.
“We’re doing Rs 16,000-17,000 crore (in capex) this year (through March 2018) and my sense is that it will be in that ball park for next couple of years at least,” the official said, adding that the carrier generates cash flows of around Rs 20,000 crore annually. Airtel, Vodafone India and Idea have been investing heavily to expand data coverage to keep up with with Jio’s pan-India 4G footprint.
Airtel invested Rs 15,000 crore, Vodafone Rs 8,300 crore and Idea Rs 8,000 crore to upgrade networks in the last financial year. Jio’s capex was Rs 18,000 crore in the March quarter was and the company had said this will stay the same in the July-September period. The incumbents have had their finances severely dented as they have been forced to respond to the price war unleashed by Jio.
“The pricing is really low, it can’t go lower than this. I see this (price would) still continue for other nine to 12 months but having said that the pricing will only start moving up,” the executive said.
Source:- Times Of India