Airtel to trim 4G capex with up to 30% jump in 5G traffic

© Provided by The Financial Express Bharti usually spends about Rs 35,000 crore per year in its India business alone.

Bharti Airtel on Wednesday said that the company will squeeze its investments on 4G capacity and direct it towards 5G. This comes after the company started to see increased traffic on 5G at particular sites, moving away from 4G.

“If you look at an individual customer, on a particular site that has 5G, about 25-35% of traffic is already getting offloaded on 5G from 4G. So, 5G could be a capacity offload of 4G and therefore, one of the things that we are looking at is to squeeze out our 4G capacity investments,” said Gopal Vittal, MD and CEO (India and South Asia), in the post-earnings call with analysts.

Bharti usually spends about Rs 35,000 crore per year in its India business alone. While it does not expect an overall rise in capex in the coming years, it may frontload some of the investments early to support the 5G network rollout.

“The interesting thing is that on the NSA (non-standalone) technology, our commercial trials are giving us a 30% higher coverage that what we would have had if we have gone to SA (standalone architecture,” Vittal added.

Currently, Airtel is deploying 5G on NSA mode — 5G being deployed on top of 4G — which means that the devices use existing 4G network for functions such as calls and setting up initial connections, while 5G is used for faster data transfers. The NSA mode is cost-effective. In case of SA, which Jio is using, 5G network is independent of the 4G network.

Airtel, which attributes its growth to quality consumers and increase in consumption on the network, said its 5G users are experiencing upto 500 Mbps of speed. 

Bharti is also upping its rural penetration. “In 60,000 high potential villages, Airtel is not present. We could have gone earlier but today I think the time is right for us to expand into these areas.” 

Currently, Jio has a strong rural hold and Airtel sees the potential of increasing its market share with 4G. “This is a fight for 4G customers and less to do with 2G, which is at that entry-level price point,” Vittal said.

Recently, the telco raised its base tariffs by 57% to Rs 155 in 17 circles. In the earnings call, Bharti said it was expecting a higher churn in the circles of Odisha and Haryana. However, the churn has been relatively lower.

On the broader tariff hikes in 4G, Vittal said, “As we have always mentioned, we can’t do this unilaterally and if we do it and lose market share then to draw that share back would actually be far more difficult. In the case of entry-level plans, it was a calculated bet”. He continued to express concerns over the lower returns on capital employed and reiterated the stance to take Arpu to Rs 300.