Airtel is planning to invest $2.5 billion (around Rs 16,090 crore) in India in 2017-2018 with focus on expanding its 4G network, the company said in an investor call on Wednesday. Airtel will also pump in $500 million (around Rs 3,219 crore) in its Africa business, reported Mint.
“In the short-term, we are seeing average revenue per user compression,” said Chief Executive Gopal Vittal. “In a world of data, what happens is, when a customer gets habituated to data, then moving pricing at a time when there is equilibrium in the market will actually lead to all of that pricing coming back in the form of revenue.” He explained that in the short term, one of the major metrics that Airtel is tracking is “going relentlessly after market share.”
This comes after the announcement in March of the merger of Airtel rivals Idea and Vodafone. The merger is expected to create the country’s largest telecom company with Rs 80,000 crore in revenue, according to media reports.
“We feel that there is an opportunity for us to accelerate our market share even as tariffs come down, which is what happened in the quarter, leading to some revenue pressure,” Vittal said.
In an investor call, Airtel also said that the telecom sector is being “heavily taxed”, PTI reported. “The question is, what can we do to get rationalisation on that, at a time when the industry is under stress. Also, the spectrum cost, which has historically been high...what can we do to bring it down,” Vittal said.
On Tuesday, Airtel reported 72% drop in year-on-year net profit in the fourth quarter of 2016-2017. This despite Airtel’s acquisition of Telenor India that took its subscriber base to 307 million and revenue market share to 35.6%. The company has predicted that India’s smartphone penetration will double in the next three years.