The lack of a reliable ecosystem and the high price of the coveted 5G spectrum will deter Bharti Airtel from participating in the auctions if they take place next year.
Bharti Airtel CEO Gopal Vittal said the company would stay away from 5G auctions, if they happened next year, as spectrum offered at current prices was not affordable for the company.
“The 5G ecosystem has yet to develop here and the prices are very high and we cannot afford them,” Vittal said during the company’s call after the earnings.
He said the company would not buy the radio waves at current prices at the rates suggested by the Telecommunications Regulatory Authority of India (TRAI).
This is not the first time the company has expressed reservations about the bidding for 5G auctions. Bharti Airtel has maintained this position from the moment the regulator presented its suggestions on the price of spectrum.
TRAI recommended auctioning around 8.644 MHz of telecom frequencies, including those for 5G services, at an estimated total base price of Rs 4.9 trillion.
Telecommunications companies such as Vodafone Idea (VI) and Reliance Jio have said that current prices are exorbitant.
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Vittal also proposed an increase in rates, saying that current prices were not sustainable.
Bharti Airtel on Tuesday posted a net loss of Rs 763 crore for the July-September quarter (Q2). The company had posted a consolidated net loss of Rs 23,045 crore in the same quarter last year, after provisioning for Adjusted Gross Income (AGR) installments.
The company posted the largest increase in revenue, primarily due to customer onboarding and higher data consumption.
Revenue increased 22% year-on-year to Rs 25,785 crore compared to Rs 21,131 crore a year ago.
The Ebitda margin (earnings before interest, taxes, depreciation and amortization) increased 366 basis points (bps) year-over-year to 46 percent, the highest in at least five quarters. The EBIT margin improved 768 bp year-on-year by 17.1 percent.
In the India business, the average monthly revenue per user (ARPU), an important matrix for measuring the performance of the telco, increased to 162 rupees from 128 a year ago and 157 in the June 2020 quarter.
Operationally, the quarter was good. Consolidated EBIT of Rs 4,412 crore (an increase of 121 percent year on year) was well above analyst estimates of Rs 2,616 crore. Similarly, cash earnings from operations (before currency fluctuations and derivatives) increased 32 percent year-on-year to Rs 8,048 crore.
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Airtel also announced its exit from the Ghana telecommunications market, selling its 49.95 percent stake to the Government of Ghana. Consequently, it took on an impairment charge of Rs 184 crore.
When asked about the suspension of interconnection usage charges, Vittal said: “All operators are on an equal footing when it comes to IUC charges, we don’t care if they are removed.”
The IUC charges were a bone of contention among the telecommunications companies, as Reliance Jio wanted these charges completely eliminated, while Bharti Airtel and Vodafone Idea (VI) wanted the rate to continue.
IUC charges are essentially payments that a telecommunications actor pays to another telecommunications company on whose network the call terminates.
Earlier this year, TRAI deferred the introduction of the zero IUC charge, providing relief to telcos. Currently, companies are paying a 6 paise per minute charge on all voice calls to other networks until December 31, 2020.
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