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Business News/ Companies / Bharti Airtel to withdraw discounts, improve efficiency
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Bharti Airtel to withdraw discounts, improve efficiency

Bharti expects merger and acquisition transactions to rise after the govt anounced new rules for the telecom sector

Airtel India CEO Gopal Vittal says The current levels of voice tariffs are not sustainable. Photo: MintPremium
Airtel India CEO Gopal Vittal says The current levels of voice tariffs are not sustainable. Photo: Mint

New Delhi: Bharti Airtel Ltd, the country’s largest mobile phone operator, will not raise tariffs immediately although they are unsustainable and instead withdraw discounts, improve efficiency and save costs.

“The current levels of voice tariffs are not sustainable. Input costs like fuel are rising. We are in a deeply competitive market and we will continue to reduce discounts wherever we see an opportunity," Gopal Vittal, CEO for Airtel India and South Asia said on Wednesday at a briefing on the telco’s fiscal fourth quarter earnings announced a day earlier.

Not increasing tariff is a good idea as consumers might reduce usage, according to Shobhit Khare, telecoms analyst at brokerage Motilal Oswal Securities Ltd.

“At the end of the day, increasing the headline tariff makes no sense with most users paying significant discounts to the headline tariff," Khare said. “The headline tariff is like a card rate and only once the discounts are completely taken out does it makes sense."

Vittal said the company is seeing improvement in the quality of subscribers that has led to the lowest ever churn levels of 2.4% for the March quarter.

Churn refers to the percentage of subscribers leaving the network.

Bharti expects merger and acquisition transactions to rise after the government announced new rules for the telecom sector.

“With the new merger and acquisition (M&A) norms allowing 50% revenue market share, we will see a lot more active consolidation in the next 2-3 years," said Sarvjit Singh Dhillon, chief financial officer of Bharti Enterprises.

Bharti Airtel is unlikely to acquire any telco as part of the consolidation as it does not see any advantage to accrue to it from such a transaction, Dhillon said.

Dhillon said Bharti Airtel has a network that has already covered most of the country, leaving little for any acquisition to be worth looking into.

Christian de Faria, chief executive officer of Bharti’s Africa business, said the company was doing everything right in the continent and was No. 1 in 11 markets and No. 2 in four of the total 17.

The widening of losses in the Africa business, he said, was because the fourth quarter being seasonally weak and a number of one-time financial setbacks.

Bharti Airtel Ltd’s fourth quarter profit surged 89% to 962 crore from a year earlier, the company’s second straight gain in quarterly profit after almost four years of declining growth, as the nation’s biggest mobile phone company withdrew some discounts and subscribers spent more on data plans to access the Internet from their smartphones. Revenue for the quarter was up by 13.5% to 22,219 crore.

Bharti Airtel shares fell 2.24% to 327.65 at the end of Wednesday’s trading on BSE, while the exchange’s benchmark index lost 0.22% to 22,417.80 points.

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Published: 30 Apr 2014, 07:07 PM IST
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