Bharti Airtel sees no steep tariff cuts

SINGAPORE -Bharti Airtel Ltd, India's top mobile services firm, said yesterday it does not expect to make any aggressive tariff cuts to maintain its share in a market that is becoming extremely competitive.

By (Reuters)

Published: Tue 18 Mar 2008, 9:02 AM

Last updated: Sun 5 Apr 2015, 1:19 PM

"Looking at the low level of tariffs, we do not expect any significant downward trend," Akhil Gupta, a joint managing director at Bharti Airtel, told Reuters in an interview on the sidelines of a conference in Singapore.

"Some tariff reduction is possible as we save on costs, and those benefits will be passed on to the customer. But we do not expect to make any aggressive cuts," he said.

Analysts have been expecting Bharti to make steep tariff cuts to keep its market share in light of increasing competition.

Its stock price has also been battered by uncertainties over spectrum allocation and fears of a market share battle after the government allowed key rival Reliance Communications to start GSM-based mobile services.

One of the earliest mobile operators after India opened the sector in the 1990s, Bharti provides services on the popular GSM platform in all of India's 23 telecom circles, or service areas.

The government recently awarded licences to many new players, raising the prospect of more competition for the 12 firms that now operate in some or all service areas.

Gupta said there was every reason to believe that the growth rate for Bharti's new subscribers, and for India as a whole, would be sustainable.

"We've been adding about 2.25 million (subscribers in January and February) -we expect that trend to be sustained."

Last month, Bharti, India's fourth-most valuable firm, said its number of users had reached 60 million, including fixed-line and broadband.

India's operators have been adding about 8 million subscribers each month, making India the world's fastest-growing mobile market, helped by cheaper handsets, networks expanding into rural areas and call tariffs as low as 1 U.S. cent a minute.

Meanwhile, Bharti expects to get additional spectrum in a total of 13 circles soon, Gupta said.

In January, Bharti said the government had agreed to to give the firm additional radio waves in five service areas out of the 10 circles it had applied for.

"Five we have already got, five is likely to be given very soon, and three will be coming very shortly, so I think about 13 circles we will be getting more spectrum," Gupta said, adding that this would take place within the next few months.

At the end of last year, India had 233.63 million wireless users, up 56 per cent on the year -and more than the combined populations of France, Germany and Britain.

The outlook remains robust because only about a quarter of India's more than 1.1 billion people has a phone, and the government has a target of 500 million phones by 2020.

Gupta said mobile number portability -where subscribers can retain their mobile numbers when they switch operators -could boost Bharti's subscriber growth.

The move, which will be introduced by the government later this year, could put more downward pressure on tariffs as it would make it easier for customers to jump to another operator.

"Bharti will be one of the biggest gainers of mobile number portability because people have a choice to move, and they would usually want to move to the leader in the sector," Gupta said.

New Delhi-based Bharti, 30.8 per cent owned by Singapore Telecommunications Ltd, reported a better-than-expected 42 per cent jump in net profit to Rs17.22 billion ($437 million) for the fiscal third quarter ended December.

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