Airtel to boycott 5G spectrum auction if the price isn’t right

Airtel to boycott 5G spectrum auction if the price isn’t right

Bharti Airtel has stated that it will not bid on 5G spectrum in India’s upcoming auctions if the reserve price remains fixed at US$68.58m/MHz, as per regulator TRAI’s advice.

The operator’s already substantial debt burden has been increased by the recent Supreme Court decision to support a reclassification of adjusted gross revenue (AGR). Airtel’s dues are estimated at around US$5 billion.

Gopal Vittal, the operator’s MD and CEO for India and South Asia, was blunt about TRAI’s recommendations: “5G requires a large block of spectrum. 100 Mhz spectrum for INR 50,000 crore, we can't afford.”

Airtel’s CFO Badal Bagri did note that the industry is collectively beginning to increase mobile and data rates, correcting years of ‘race to the bottom’ pricing and tumbling ARPU. However, Vittal commented that the tentative increases do not go far enough.

“We have ARPU of Rs 135. In the end state, I think we need to see ARPU of Rs 300 in Indian telecom. I think that is when we will turn a reasonable return of capital on the overall business”, said Vittal. “While our ARPU will go up in next quarter because of tariff increases, they are just not good enough. At Rs 200, we will barely be head above water in terms of return on capital.”

While Airtel registered a substantial net loss in the previous quarter, it was optimistic about the future, with significant gains to its 4G customer base. It is awaiting a verdict on its request to pay its dues over the course of several years.

Bagri was upbeat on the prospect, saying: “We are hopeful that we will get favourable outcome from the engagement with judiciary and regulator that will ensure long term growth and viability of the sector.”

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