Q1 21/22

Aug 4, 2021

Quarterly report

Good afternoon and thank you for joining us on this webinar to Parti Airtel's Q1 FY 'twenty two results. Before I hand over the call to Gopal, I want to quickly remind all the participants discuss that we will be conducting a question and answer session. And participants who wish to ask a question can send us their question using the moderator chat option on the BlueJeans interface. With this, over to you, Gopal, for the opening remarks. Thank you. Thank you, Komal. Good afternoon, ladies and gentlemen. Thank you for joining us on this webinar to discuss discuss the results for the quarter ended 30th June 2021. Also present with me on this webinar are Bagel, Ajith and Komal. So let me start with an update on COVID. India is now seeing a recovery from the devastating impact the 2nd wave of COVID discuss the progress we made in the quarter. Things are slowly picking up and business is picking up businesses are opening up. Right through this tough period, discuss our teams at Airtel did what was needed to serve our customers. Be it our network teams, the home delivery teams, our sales teams or our digital teams. Every single one of our people live the spirit of service. And I cannot really stress how proud I am of discuss each one of us at Airtel stood up to serve the nation in this hour of crisis. Discuss 3,224 of our employees were impacted by COVID up to date. Sadly, we lost 24 of our colleagues. Discuss. While this is an irreparable loss, we have done what we can to provide support to the families of these employees through a generous insurance, discuss jobs for their spouses and education for their children. We've also set up an extensive COVID support program to help our people in dealing with the stress caused by the pandemic. Our partnership with Apollo Hospitals has allowed our own employees, their families as well as the employees of our associates to all be vaccinated. Till date, close to 90% of our people have been vaccinated. Discuss. In addition, we have helped our low income customers tie lower the impact of COVID through providing about INR 270 crores of benefits to keep them connected. Discuss. Let me now briefly comment on our performance during the quarter. Our consolidated revenues for the quarter grew by 4.3% sequentially to hit INR 26,854 crores. Our EBITDA margins improved from 48.9% to 49.1% on a sequential basis. While a lot of attention is paid to our mobile business, I do want to underscore the strength of our portfolio, which is very clear in our performance this quarter. As you know, we have 3 parts to our overall portfolio: India Mobile, Enterprises and Homes in India and Africa. Discuss. Sequentially of the INR 1106 crores of growth that we showed at a consolidated level, India Mobile accounted for 20% of this growth. Discuss. The rest of the growth, which is a balanced 80% came from our other businesses as well as geographies outside of India. Discuss. So at a time when wireless revenue was impacted by the COVID led lockdown and the consequent financial squeeze amongst many of our relatively lower income customers, discuss the rest of the portfolio delivered strongly. This really shows you the resilience and strength of our portfolio. Let me now comment briefly on each discuss our businesses within the portfolio. And I will start with the Homes business. During the quarter, we continued to expand our presence by rolling out an additional 1,000,000 home passes. Discuss our innovative partnership model with a local cable operator allows to extend our services to an additional 98 towns, take our local cable operator presence now to over 300 towns. In fact, our broadband presence is over 300 plus towns. With the continued growth in demand for high quality broadband triggered by work from home, online education and entertainment, discuss. The business added 285,000 customers and reached a milestone of 3,350,000 broadband customers. This was despite challenges faced in the quarter due to lockdowns. With the lifting of the lockdown and the ebbing of the second COVID wave, discuss. We are seeing even stronger momentum in this business. We are also seeing the temporary disconnections made by small businesses and commercial offices discuss our financial results. Going forward, I believe fiber to the home is a very large opportunity and we will continue to step up investments to take our network to over 2,000 towns across India and cover over 35,000,000 home passes in the next 3 years. We have further strengthened our number 2 position in the DTH industry and now have a presence in 18,000,000 high value homes. Discuss. The ARPU for this business has remained at INR 151. I believe there are 2 opportunities to grow this business. Discuss. The first is conversion from cable and the second is the move to connected boxes, which also allow us to operate as a platform of choice discuss our progress on the progress we made in the quarter. During the quarter, we made a representation to the government to bring DTH under the DoT given the varying regulatory policies discuss the same results arising out of the different delivery modes of the very same content and services through different technologies, discuss the progress we made in the quarter. We will continue to pursue this so as to bring about a more cohesive and consistent policy regime. Discuss. For the mobile business, COVID induced lockdown saw some impact on smartphone shipments. We also saw consolidation of spends discuss our results at the lower end of the market as many customers migrated to their hometowns and villages. That said, the impact of this lockdown on our business discuss our financial results. We are now in the Q1 of 2021 discuss while we were about flat this time. And this has largely been on account of the work that's gone on behind the scenes on raising our digital capabilities. Discuss. In addition, I must say that June bounced back very strongly and the momentum into July has been sustained. Despite all the challenges, We added 5,100,000 4 gs customers and continue to lead the industry on ARPU at INR146. Discuss. Our revenue market shares at the end of quarter 4 at well over 35% was also at a lifetime high. Discuss. I also want to underline some changes that we made to our tariffs recently. Our minimum entry plan will now start from INR 79 discuss the results of the year. This pack also offers more value to the customer with up to 4 times more outgoing minutes of usage. Discuss. On postpaid, we are moving all of our corporate entry plans to INR 299 from INR 199 while providing extra value. Discuss our retail postpaid plans have also been further simplified. We now have just 4 plans and 1 add on family plan. As we always said, ARPU in India is extremely low. And at this level, our return on capital is in the low single digits. Discuss. ARPU must rise first to INR 200 and eventually to INR 300. What we have done on the tariff front discuss our strategy of focusing on quality customers. During the quarter, we've also deployed discuss additional mid band spectrum in the 18,021,021,200 bands to enhance capacity and improve customer experience. Discuss. One of the biggest initiatives we took was the deployment of our sub gigahertz footprint on a pan India basis. Discuss. We're doing this by deploying new radios in 7 circles where we did not have a sub gigahertz layer. In 4 other circles, discuss. We've upgraded our software to provide 4 gs services on the sub gigahertz layer. The introduction of the sub gigahertz layer discuss. We'll give us dramatically enhanced coverage of an additional 19,000,000 people, thereby driving greater competitiveness in our mobile segment. Discuss. I do want to underscore that the sub gigahertz layer that we have introduced is the reason for the elevated CapEx in the quarter. Discuss. Our overall CapEx outlook for the year remains unchanged from what we discussed last quarter. I say this because we've already made substantial investments in capacity over the last few quarters discuss in the form of capacity addition, spectrum refarming and augmentation of transmission networks. During the quarter, we saw a traffic surge, discuss. But the good news was that the consumption pattern was flat across the day, much flatter. And you must remember that our investments in capacity discuss our results. So with a flatter curve, CapEx is not impacted. I now turn to Airtel Business. Discuss. Airtel Business has consistently grown market share and outperformed its listed peers. In fact, as for Frost and Sullivan, discuss. In the enterprise data market, our share has moved to 31.4%, up from 22.4% a year ago. Discuss. In the enterprise mobility market, we are undisputed leaders with 43.3% market share. In addition, we are now the leaders in IoT and indeed in every part of the connectivity market. While COVID has seen some softening of the order book in the 1st 2 months of the quarter, discuss. We've recovered strongly in June and into July. For the quarter, Airtel Business clocked revenues of about INR 3,790 crores, discuss a sequential growth of 2.4 percent and an EBITDA margin of 38.8%. Airtel Business serves over 3,600 large discuss and 1,000,000 plus emerging enterprises. Yet as I have mentioned before, 20% of our customers account for 80% of revenues in every single vertical. There are many large greenfield accounts where we have very low share discuss. And this is why I feel the opportunity in this business is really limited by our own imagination. We have 2 opportunities. The first is to go deeper what we call farming. This is about leveraging the trust that we enjoy with our customers to offer many more solutions discuss around cybersecurity, surveillance, cloud communications, cloud based services, work from home solutions, etcetera. Discuss. At the same time, there's a massive opportunity to also go wide, to build our presence in several customer accounts where we're either not present or have limited presence. This is what we call hunting. Our entire go to market has now been retooled to address both these opportunities discuss our financial focus, sales incentives and in sourcing of our SME sales force. Discuss. All of this is being bolstered by strong omni channel digital capabilities from search to discover to purchase and finally to experience. Our teams are now digitally enabled end to end so that the process of sales, discuss our financial results. Having commented on each of our business segments, I want to step back today and talk discuss our view of the market and customer opportunity in India. Our strategy and our choices flow from this view. There are several Indias as we all know. Incomes, lifestyles, geographies all have an impact discuss the wide differences in the Indian opportunity. But let me give you a quick oversimplification of this market. This will help clarify the basis of our strategic choices. There are potentially 50 odd 1000000 high value homes in India. Discuss. They comprise of executives, self employed professionals, businessmen and the like. These are customers who want to feel special. Decide a simple convenient experience and they are really concentrated in the top 25 cities of India. Discuss. The average spend today on all telecom and entertainment services is about INR 1500 to INR2000 per month, discuss. But this can grow with incomes rising with pricing being corrected and they have the capacity to spend. Discuss. The 2nd broad segment comprises of almost 500,000,000 migrants, gamers, young students, blue collared workers, discuss the challenges of the market. For the sake of simplicity, let's call them aspires. These aspirers have a smartphone The device is an essential part of their lives. They seek a good experience around their specific use cases and look for good value, discuss not necessarily the lowest price. A large part of this customer base is concentrated in about 300 odd districts in India. Discuss. The common characteristics of both these segments is that they switch seamlessly between channels, both online and offline. Discuss. The 3rd segment comprises of an additional 400,000,000 users, comprising of farmers, the elderly, housewives, discuss rural traders and these are largely users of feature phones today. They're looking for basic connectivity and a satisfactory experience that is hassle free. Discuss. The first two segments, the high value home and the Aspirus account for almost 85% to 90% of the overall customer market discuss our consumer market in telecom as a whole. This view of the market is what informs our choices and informs our strategy. Discuss. We have a 4 pronged approach as I mentioned earlier. 1st is to provide a razor sharp focus on these quality customers give almost 85% to 90% of industry revenue. 2nd, a relentless obsession to deliver the best experience for them to our network and all the digital assets that we are building. 3rd, to leverage these digital assets as well as the partnerships we form to create new revenue streams in adjacent areas. And finally, doing this with financial discipline and sound governance. Discuss this strategy is a thread that ties all our businesses together. So let me provide a little more texture and example on each of these areas. Let me start with quality 1% of our postpaid customers are now on the family plan with negligible churn. Another example is the integration of our payments bank proposition into the core of the mobile offer. Discuss. And these are just two illustrations of that. A last example is our pivotal launch of Airtel Black. This is India's first truly converged solution. It is built for the high value home, who has the option of bundling 2 or more of our services, discuss fiber DTH or mobile together to be a part of the Airtel Black Club. This entitles the customer to 1 single bill, discuss one customer care number with a dedicated team of relationship managers and priority resolution of falls and issues. Discuss. All of this comes with 0 switching and installation costs coupled with free service visits for life. The most exciting thing for us discuss. Close to 30,000,000 of the 50,000,000 high value homes that I spoke about are already on our network, either with a postpaid DTH or broadband connection. So this opportunity is really ours to tap into. In fact, we've seen strong traction on Ettel Black and are already close to reaching the 700 ks mark discuss in terms of homes. Remember, each of these homes gives an additional average revenue per account of INR650. Discuss. The second element of our strategy, which matters deeply to the quality customers we serve, is to deliver a great experience. To build a world class network, one that delivers the best speeds, the best video experience, discuss the lowest latency and the best gaming experience in India. Our complaints, which are a simple measure to drive the behavior of every employee in Airtel is at an all time low. And we've built a network that's fully ready for 5 gs. Discuss. It's a capability we've already demonstrated by conducting India's first 5 gs demo over a live network discuss and are now conducting trials in multiple cities. We've made substantial investments in our transport layer over the last 5 years to be ready to deploy 5 gs when needed. We are also leading the O RAN initiative, the Open Radio Access Network initiative in India by partnering with the best companies such as Intel, Qualcomm, Mavenir, Algeostar and Red Hat. Discuss. In addition, we are now part of a very critical make in India push, having announced a strategic partnership with the Tata Group. Discuss our formidable spectrum holdings, particularly in the mid band, can be deployed for 5 gs over time. Discuss. All of this is supported by India's largest network of data centers and large global submarine capacities. The other aspect around experience to deliver an omni channel model of delivery. Customers today switch seamlessly between online and offline channels discuss and are looking for a consistent and cohesive experience wherever they are. Our model to deliver this is to follow the customer discuss the flywheel of experience as we call it. This flywheel traces the customer across every part of the lifecycle discuss the progress we made in the quarter. Every part is being retooled by digital teams. Discuss. Let me give you one example from Airtel Black. A customer today can order Airtel Black from the web or our app. The moment the order is placed, this goes straight to the nearest store to confirm the time and date of the appointment. All metrics relating to this call are tracked inside Airtel IQ. Discuss. Once the appointment is taken, the work order goes digitally to the nearest installer through our Airtel Work app, which tracks and provides analytics discuss the progress we made in the quarter. It also has an inbuilt scheduling algorithm to make sure that no time is wasted between 2 tasks. Expand the menu of products to meet many more needs in the homes of our customers. In addition, this capability can also be taken to our Airtel business customers to create new digital service revenues. We've already done this with Airtel IQ and we'll do the same with Airtel Work. Today we have over 1900 people in our digital organization building products and services like this. Heter is also increasingly a magnet for the best and brightest of digital talent. Discuss. And this leads me to the 3rd part of our strategy, leverage our digital assets to create new revenue streams in adjacent areas. Today Airtel has one of the biggest digital ecosystems in India with over 190,000,000 monthly active users across its 3 platforms Airtel Think Thanks, discuss Wink Music and Airtel Extreme. As of today, Airtel Payments Bank has a monthly transacting user base of close to 30,000,000 users, discuss an annualized GMV of over INR 100,000 crores and a merchant base of over INR 7,000,000. Even more importantly, discuss. AHL Payments Bank has been fully integrated into all our digital channels, both our consumer app as well as retailer app, making us one of the few companies that can collect cash for any service at the point of sale, both online and offline. Discuss. I'm also pleased that Airtel Payments Bank is now on the verge of hitting a 1,000 crores annualized revenue run rate and has actually broken even in the month of July. Discuss our 4 core strengths of data, payments, distribution and network are now increasingly becoming a source of competitive advantage to build an Airtel of the future. There is Nextrop by Airtel, which is today the largest network of data center business in India. We have Airtel IoT that's now a market leader in the M2M space. We're also leveraging our digital assets to create altogether new revenue streams. The Zetel IQ, our cloud communication suite, which now has over 120 customers, expand the biggest Internet companies, banks and more. Desertel is secure both in the B2B and B2C space that offers protection from cyber attacks and threats. Discuss. This is a business that's now gaining traction. There's Eltel Ads, which thrives on our vast digital assets. Today, we already have around 100 brands discuss advertising on our platform. Finally, we have our subscription services across music and made video, which are beginning to gain traction. Discuss. All of these businesses in the digital area operate in a market that's over 50,000 crores and growing. Discuss. Even more importantly, the economics of playing in these markets are very attractive since they almost come at no cost and CapEx. Over the last few quarters, we made solid progress in driving these new revenue streams of revenues and are now in touching distance discuss the financial results of INR 1,000 crores of annualized revenue. At the right point, we will provide more color on this segment through our disclosures. Discuss. I want to end with a few words on ESG and corporate governance. The company remains aligned with the Paris Climate Accord proactively implementing clean fuel based power solutions for our towers, our data centers, our switching centers and other facilities. Discuss. We've remained committed to the society, our customers and employees right through the harrowing time of the pandemic. We have continued to demonstrate the highest standards of corporate, financial and operational disclosures. Our classification of revenue and costs discuss our operational KPI definitions are the most stringent in the industry. In wireless, for example, discuss our revenue customer earning customer definition takes into account actual revenue earned in the last rolling 30 days. Discuss. When it comes to AHL Payments Bank, we have further enhanced our reporting standards and now we'll be representing 2 additional numbers from this quarter. Discuss. Firstly, the total users, these are those who have a bank account or wallet with us. Secondly, GMV, which is a standard definition in the industry. This is in addition to the monthly transacting users. I must also underscore that the monthly transacting users that we report discuss our unique users who have transacted on the platform at least once in the last 30 days. This is a more stringent definition than any other payment platform today. Khrystil have recently aligned us assigned us a GVC Level 1 rating indicating the highest levels of corporate governance practice and value creation. Discuss. Lastly, on the recent AGR judgment of the Supreme Court, our request was to permit correction of computational errors in the AGR demands by DOT. Discuss these apparent errors have a significant implication on the overall AGR demand. While we are disappointed with the recent outcome, discuss. The company has provisioned for the onerous payout and already paid over INR 18,000 crores covering its obligations for the 1st few years discuss as per the direction of the Supreme Court. On the next steps relating to any review petition, We will be guided by legal advice and no decision has been taken on this yet. Finally, a word on our capital structure. Discuss. The balance sheet continues to remain strong with healthy cash flows and a net debt to EBITDA of just about 3, position that is comfortable. Discuss. The business has been generating strong cash flows for many quarters now. This has been a result of revenue growth, strong operating leverage and effective deployment of capital. Discuss. Over the last few months, we've announced multiple monetizations in Africa in the form of tower sales as well as stake sales in Airtel Money. Discuss. Following a $200,000,000 investment in Airtel Money by TPG, a $100,000,000 investment by Mastercard and the sale of tower companies in Madagascar and Malawi. We've also recently announced an additional $200,000,000 investment from Qatar Investment Authority discuss the progress we made in the mobile business in Africa. The total proceeds of close to $1,000,000,000 from all of these transactions will be used for further deleveraging. Discuss. In sum, our performance for the recent quarter has been strong because of the resilience and depth of our portfolio. In every one of our businesses, discuss. We're at a lifetime high in terms of revenue market share, the most critical barometer of our competitiveness. Our momentum going into quarter 2 has been strong. Discuss. Our strategy and choices are dictated by our view of the India market opportunity. These are cohesive and simple. Discuss. Even more importantly, we're building an Airtel of the future and are well positioned as we go forward. Thank you and I will now take your questions. Discuss. Thank you, Gopal. I wanted to quickly remind all participants that they can send us their question on the moderator chat option on the BlueJeans interface. The first question that we'll be taking is from Ashwin Jain, iPro MF. Gopal, this first question is, there is an outside analyst. Discuss Bharti as the leader in the postpaid and the premium segment. It is also the understanding that typically pricing leads Increases are taken by the leader. And therefore, could you articulate why Airtel is not more aggressive on price hikes with the premium customer segment? I will ask your second question after you answer this. So I think that's a good question. We are we've already done that. Discuss. We have taken a pricing on postpaid in the B2B space moving up our entry plan from $199 to $299 discuss. On all other plans, we are at a very substantial premium. In fact, I would argue that our entry plan on postpaid really begins at 3.99 discuss. There are plans in the market today that some of our competitors offer in postpaid, which start at 199. So we are close to 2x of those plans. That's a very substantial premium already. Right. Gopal, the second question is on the network. He would like to congratulate us on the operational excellence. And The question is that we now support 844 4 gs users per tower compared to about 7 12 users per tower a year ago. And therefore, could you talk a little bit about the operating leverage with regards to the number of towers and the data consumed per user? Yes, I think the fact is that the overall data consumed in India is exceedingly high, but simply because of the allowances that are that we provide at very low levels are extremely high. And this is something that we've been talking about that discuss the ARPUs in the country are perhaps lower than where it should be to return a reasonable return on capital for our investment. Discuss. The reason that our users per tower have gone up is that we have really focused a lot on this. Discuss. We have a project where we actually look at every we'll measure the utilization of every single tower. We look at the number of users at every single tower and our entire go to market is aligned to that metric. So one of the things that all our sales teams and our field force are accountable for is actually driving up utilization, discuss what we call low utilization sites or unprofitable sites so that the average comes up. And I think this is one of the reasons that we saw discuss a significant part of our incremental net adds in the last 12 months actually come from those sites where our utilizations were low. Discuss. Thanks, Upal. The next question is from Kunal Gohra from BNP Paribas. He wants to ask queue. What are your thoughts on the industry structure over the next 1 to 2 years? And is Etted prepared for a 2 player market if the situation arises? And if it does, what would be the additional investment requirement? So I think that this is a I mean, I do feel that as a country, we do need 3 players. I mean, this is a large enough discuss our next question. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Discuss and 3 plus the government player. So there is clearly a situation of serious financial stress in the industry and discuss. We've seen one of the players actually saying to the government that they may not be able to pay their dues coming up in March 2022. We hope that the government does something to actually provide some relief to the industry. But even more important, I think if ARPU can go up, discuss. So I would love to continue to see a 3 player market. I think that would be discuss the appropriate outcome for a country as large as India. Substantial investments have been made already by the industry. Discuss. There are lots of jobs, not just direct jobs, but indirect jobs and there are many, many parts of the ecosystem that depend on this industry for employment and livelihoods. And I think just from a national perspective, it would be right to see appropriate to see discuss an industry structure where 3 players not just survive, but thrive. And of course, the government player is always there. Discuss. Thanks, Upal. The next set of questions is around Payments Bank from Kunal. He is saying thank you for disclosing additional information along Payment Bank. What are the nature of transactions that we are seeing and can you talk a little bit about the future plans that we have for Payments Bank? So I think we've seen a strong growth in scale on our payments bank. As we said, we have almost 30,000,000 users. We have several streams of revenue that come out of the payments bank. One is, of course, the deposits itself that are actually put in the payments bank, which are on a certain interest discuss and our deposit base has been growing over the last couple of years. Also, the average balances per customer has been growing. The second big revenue stream is really around remittances. Here we are the number one player across the country and And this is simply because of our vast customer base on the telecom side. We have a large base of customers. We understand the corridors of consumption and usage and speaking. And therefore we are able to actually play in the remittance space in a very powerful way and that's been a large source of GMV. Discuss. The third part is really around payments to merchants. We have a large pool of merchants today about $7,000,000 So increase we are seeing increasing discuss growth in our merchant payments on the offline side. And finally, there is the digital side, discuss both again payments to payments as well as remittances that emerge. The last point on Payments Bank is really around cash collection. One of the big initiatives we've also discuss. One of the big sources of revenue that we are driving is really around cash collection for companies that need digitization of cash at source. Discuss. And we are actually identifying each of those customers and using that as another opportunity to drive revenue discuss. Thanks, Bhupal. The next set of questions are from Sanjay Jain of ICICI Securities. The First question that I'll ask you is on the CapEx. The CapEx for the India business has been elevated in the past 4 quarters. While our guidance was for, I would say flattish to slight reduction in CapEx. So therefore, do we still see CapEx reduction in FY 2022 versus FY 2021? And could you please explain how much of this CapEx is creating capacity for 4 gs and how much is going towards strengthening backhaul fiber and preparation for 5 gs? Yes, I think that, Sanjay, the CapEx that we put in this quarter, a large part of it was discuss the massive rollout of our 90850 band sub gigahertz radios. We wanted to get that done fast because we spent a lot of money in actually buying that And as I mentioned, we are able to add almost 90,000,000 users or 90,000,000 customers on to our coverage footprint. And so One of the reasons that you see an elevated level of CapEx in quarter 1 is really an advancement of those deployment of those radios that we would otherwise have done over a period of time and we wanted to finish that up. There are 3 parts to our investment in CapEx now. Discuss. One is radios and you will see that the incremental radio investment is now coming down with the exception of this big chunk of discuss the sub gigahertz radios that were bought because a large part of the radio is only capacity radios and today we have our 900 band and our 1800 band discuss pretty much all across the country. We have a 2,100 band in about maybe 60% of the country and we have a 2,300 band in about 80% of the country. Discuss. So the incremental radios that are needed for covering additional, let's say, sites or additional towers is marginal at best. Discuss. And therefore, the only source of radio investment is really more capacity solutions where you have very high consumption in the form of new sites. Discuss. But with the spectrum purchases that we've done, we've been able to offset that. So the radio investments are continuing to now come down. Discuss. Then there is the core investments, which is a modest part of the overall CapEx portfolio and there I think is a direct function of how your capacity grows. Discuss. And the last part is on transport and backhaul. This is where a substantial amount of investment has been made over the last few years. You would see that discuss. In most companies around the world as data grows, the best telcos in the West, for example, almost 40% of their CapEx goes on transmission and fiber CapEx. Discuss. We have seen also a significant augmentation of transmission and fiber CapEx over the last few years. So I would say that All in all, it's a balanced CapEx outlook. I see no reason to change our stance on CapEx for the year. Discuss. The elevated CapEx that we saw in quarter 1 was largely, as I said, on account of the sub gigawatt rollout. Discuss. Thank you, Gopal. The next question from Sanjay Shah and this is from discuss. We have also monetized assets in Africa and shared plans to monetize assets in India such as fiber, etcetera. But we still have a large debt pool at over INR 1,250,000,000. A significant part of the debt is stable to government, that is understandable, but it is also expensive debt at So therefore, what are our plans for deleveraging, retiring the high cost debt and use of funds from the sale of assets? Ajith, you want to take that? Sure, Gopa. Sure. So thanks, Anjesh. Look, I think there are 2, 3 ways to look at this situation. One is the way you've articulated in terms of the absolute amount. And the other, I think it's important to see in 2 contexts, what is the discuss supporting base for serving this debt in terms of the overall leverage ratio. And how is that supporting base behaving in terms of its trends? I would say, 1st of all, if you see even the global level, the overall debt to the EBITDA if you annualized last quarter It's just about 3 tonnes, which is fairly okay specifically in the, shall I say, building CapEx phase as you're transiting from voice to data consummately. 2nd, the core EBITDA has been increasing. And I think given the discuss. The point is that Gopal mentioned around what is the direction of the overall mobility business in terms of tariffs. Discuss the non mobile business is growing at their own stable pace, new incremental pools of revenues with their associated EBITDA is flowing through. Discuss the trend and the outlook on the EBITDA is on the increase. So that's I think the second piece we must keep in mind. 3rd is, as is where is, discuss. Africa, if you see going by the last quarter and the trends we have seen over the last 3, 4 quarters, generates at least about $500,000,000 or more of discuss free cash flow. Our tower company, which is a merge co, we have a 41.8% stake there, discuss. It's a profit after tax of around INR 5,000 crores plus minus here and there, which generates its own dividend. There are these pools which don't need capital. They actually release capital. Release comes via dividend and also through consolidation. Discuss. And India itself is now given the way you can track the last quarter is free cash flow positive. It could be $1,000,000,000 plus discuss $100,000,000 depending on how the coming few quarters perform on tariffs. So discuss overall free cash flow generated, debt to come down, EBITDA to go up, current net debt to EBITDA fairly stable and manageable. Discuss. There is fundamentally no need to really deleverage strongly. And to mention, bulk of the deleverage has happened towards bank debt. We are virtually near 0 bank debt as we speak discuss where we are today. Post the quarter, some more repayments was done with the banks. So we have what is left is finance lease obligations, discuss the importance of the regulatory and keeping Africa aside, very marginal small bank debt in our subsidiaries, whether it's TeleSonic, whether it is BTH and Hexacom, etcetera. So those small pools apart, really we have repaid bulk to all of the bank debt and left with 3rd discuss a bucket of market debt, which is dollar bonds and some domestic bonds. From a perspective of monetization, this is not needed thereby for deleveraging, but those opportunities continue to exist. And I think there are 3 or 4 pools, you know it better. Africa continues to be listed. Clearly, its value is underrated. We can't be at a PE multiple of 6 or 7 in Africa. Discuss. You see the EV EBITDA multiples is fairly low, but that pool is available. It is list co, it is independent. We will see what and when. Without losing any control, discuss. We have a minority stake in Rovi in Bangladesh that by the way is listed now for close to 8 months. It is trading today probably at about $800 odd,000,000 in terms of value of the stock that we have, which is roughly 28%. No plans to seek control, do anything Major there. So for us, it's a liquid opportunity. The 3rd place is tower companies. If you recall, while in November, December, we accreted more share, discuss. But fundamentally, it's an independent Avco and that's a pool which is available for us to think through wherever we need to. And not even talking about the fiber in Vit discuss and or other whether it is Homes Business or Hateful Payments Bank, over time, will need to find their right discipline and scale at which they are monetizable. Discuss. These pools are available to be played for the way the business would want to play the strategy, not necessarily to monetize discuss from our perspective, but these remain available. So within that context, slightly longish, net debt to EBITDA stable, improving, discuss. Trend wise, EBITDA is growing fast, free cash flow generative independent segments, monetizable pools, which are available discuss more or less in near liquid form and over time new building monetization pools for the way it's fiber or some of the other new subsidiaries for Aetna. Discuss. Thanks, Sujit. I'll take 2 related questions, one from Rohit Chaudhia. He's asking that do we feel we could have waited a little bit more where we were looking at diluting the stake in the Africa Mobile Commerce business because valuations seem low compared to some of the global transactions in the space. Another question relating to the balance sheet is, would we look at acquiring some more stake now in Indus Towers given the recent share price moves? Discuss. Maybe the first one, the answer is, look, there is always an art in terms of timing, some of these things, but it was important to see that discuss. A small, roughly 10% EBITDA pool of Fertil Africa is now getting valued at 15% multiple. Could we have gotten 18%, could we have waited a bit for more scale to get a better multiple? The discuss. And this is only a minority chip off. Between the two where the closing has been done, PPG and Mastercard, the strike discuss. Dilution will be about 10.5%, 4%. So it's not necessarily a large dilution. It gives us a benchmark. That benchmark is significantly discuss the higher in terms of EBITDA multiple that the entire Adel Africa stock is trading at. So it allows us to be able to play the Adel Africa story also fairly well because the illumination has to happen. Discuss. And since the time we have signed each of the two quarters, we've grown fantastically well in our money. So I would say timing is an art, but it's for small stake dilutions. It's better to create good benchmarks and write that up. On Indus covers, frankly, the last time also the positioning which we probably communicate it back to you was driven out of what our belief is, which is the value for the asset and our expectation of the dividend flows coming back. If you recall, last time we spent about INR 2,900 odd crores to acquire close to 5% in one go. And within about 90 days, we got INR 2,000 crores of dividend back discuss from the entire stock. So if there are opportunities, we'll be probably assessing it. But is there a strategy? Is there a drive to be able to do that tomorrow morning? Absolutely discuss. Thanks, Sajid. Gopal, the next set of questions are from Ankur Rudra of JPMorgan. He's saying it's great to see Airtel take the initiative in changing the floor plans on 2 gs prepaid and corporate postpaid because these segments don't see competition from all the players. But could you share the thought process behind the timing? Why now rather than earlier? And should we expect more proactive action on reshaping the pricing paradigm or removing the floor plans in the 4 gs prepaid side? Well, yes, I mean, why now is anytime is okay. And frankly, I think discuss. Like we've always mentioned, the ARPUs are abysmally low, so any time would be welcome. I think that what we were trying to do is actually be discuss. We're very careful about testing this in a few markets. So we had tested this for some period of time in Uttar Pradesh and UP West. Discuss. And once we found and the reason we picked those two markets is that one is a strong market and the second is a relatively weak market. And once we found the results satisfactory and the results meeting action standards, we went ahead and did it. On the B2B postpaid side, I think it was we were watching what was happening on the postpaid segment in terms of competitive intensity and the traction from what was what were competitive moves. Discuss. And once we found that we were in a position where we felt it was time we actually made the move. I think on the rest of it, while there may be some opportunities to do it unilaterally like what we've done discuss in a few areas. I think going up beyond the premium that we today have on the large pool of discuss 500,000,000 smartphones, which is the Aspire segment that I spoke about, could lead to some switch away of perhaps some more discuss Elastic customers. And I think therefore we need to be a little bit more careful about that. We've already we're already at a firm as you know and this is where discuss. We will perhaps not be in a position to take the first step, as I've mentioned before, simply because I think that could lead to more erosion discuss the results of customers and consequently erosion of competitiveness. So I think we'll have to wait and watch how that plays out. Discuss. The next question from Ankur is that it's great to see carving out the digital assets including Payments Bank, but is there any change in the thought discuss regarding raising external capital in these businesses. I think one thing that discuss. I would say is that if you take Airtel Payments Bank, that has been that is set up as a separate company, discuss not just because of what we wanted, but also because it is mandated by regulation from the Reserve Bank of India. So it is separate it's a separate company while it's a subsidiary of Airtel and it has a strong discuss the progress we made in the quarter. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Good afternoon and thank you for joining us on this webinar to discuss the progress we made in terms of distribution scale and customer access as well as the digital assets that Airtel has. I think it still operates independently. Airtel Payments Bank, like I mentioned, is subject to certain regulatory restrictions. And as a promoted entity, discuss. We had a lock in period for 5 years to actually keep the stake, after which by regulation, You can actually lower the stake. So at some point, will we monetize Ethel Payments Bank? Will we look Other avenues of actually raising capital in Ethel Payments Bank? Yes, absolutely. I think on the digital assets, on the other hand, This part is totally intertwined with Airtel because there is no real digital asset without the access to the four strengths that I've always talked about From an Airtel standpoint. So it's very intertwined with what Airtel brings to the table and it enables us to add value not just to the core, discuss the progress we made in the sense that they are independent businesses that are profitable or that have their own business model discuss. Thanks, Gopal. The next question is from Raj Naidu. Puma, discuss. Just to add one more thing on the payments bank. Like I said, I think because it's so intertwined with Airtel in terms of the advantage that Airtel brings, discuss. While it operates as a separate company, the fact is that we are perhaps the only platform that with the current scale that we have, which discuss 30,000,000 users, close to 1,000 crores of annualized revenue, we've already broken even. Now if you are a standalone platform, you can never break even discuss with that scale. And you've seen some of the other competitors who actually put out their results and the losses that they're actually incurring. So I think the business model of Etta Payments Bank is a very powerful business model because while it operates independently, it also has the advantage discuss the scale and the asset base that Airtel has in terms of distribution, in terms of customer access and in terms of technology. Discuss. Thanks, Gopal. The next question is from Raj Nayar of JP Asset Management. He wants to know your thoughts on 5 gs and the potential implications on our CapEx plans. Discuss. I think there are firstly, I think it depends on when the auction is announced. We are hearing that it could be announced as early as next year. There is likely to be an auction of spectrum, discuss the 3.5 gigahertz spectrum band where there is adequate spectrum will probably be made available. The reserve prices that were last discuss the results announced by TREI were astronomical and we have said at that price we were not able to afford it. We're hoping that the reserve price will come down. The DoD has referred back to TREI to look at the reserve price. Our networks from a transmission standpoint are getting ready day by day. In fact, over the last 2 years, we made a substantial investment in transmission, discuss the next question. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Thank you, sir. Discuss. Most of our radios by most suppliers are already 5 gs ready as we demonstrated in the test that we did in Hyderabad. Discuss. The core networks that we have, the core investments are all getting future proofed in terms of 5 gs. So the real investments that will be needed on 5 gs is the additional radios that will be that you will need to procure in the and that is a modular investment discuss as the devices light up. So today on the B2B side, the use cases on 5 gs are still few and far between. On the B2C side, discuss some of the devices now that are coming in into India. The most recent month, 12% of the shipments discuss the performance of smartphones that came into India were already 5 gs compatible, but on an installed base basis, it's less than 1% or 2%. So even if you look at, let's say, 12 to 18 months out, this is likely to be about 15%, maybe 12% to 15% of the installed base. Discuss. And it could start with the larger cities, the more affluent geographies before it actually rolls out everywhere. Do not also forget discuss that as 5 gs rolls out, some of the 4 gs CapEx will come off simply because the cost of producing a gigabyte discuss. On 5 gs will always be lower than the cost of producing 1 on 4 gs because there's more spectrum there. The radios have use more advanced technologies to crunch in a lot more data on the same hertz of spectrum. So to that extent, I think that's the way the CapEx will get managed. Thanks, Gopal. The next question is from Sulak Govila from Morgan Stanley. He wants to know that with the upcoming launch of low cost smartphones, Do we expect the market to gravitate towards a subsidy led model given that we are all vying for smartphone customers? And how does that gel with our focus on the top two customer buckets highlighted in the opening remarks. I think, Salab, that's a good question. Discuss. We've always mentioned that the subsidy game is really a mug's game. We know that firstly, the ARPUs in India are extremely low and the financials or the P and L of any telecom company will really struggle to absorb large scale subsidies. So to that extent, I think subsidy and the second reason the subsidies are much game is that because once the subsidy discuss with Tron. You do see customers at the end of the device upgrade cycle actually coming back and Making their choices all over again. So it's not necessary that they stay on the same network. For all those reasons, we feel subsidies are a great idea. Discuss. But it is a competitive market and it's not up to us alone. So should there be a play in the low end of the smartphone segment. We'll have to wait and watch and see how that plays out. Suffice it to say that we are building a bunch of capabilities. We're working with both OEM manufacturers with Google as well as with software developers to see how we play this game in the smartest way without taking inventory positions, without manufacturing our own device, discuss while still playing with the ecosystem at large, but yet being competitive. I am not able to share a lot more texture and detail on this discuss because some of this is still being worked through and it's still unclear what discuss. Could happen competitively, but I do want to underscore that we are ready with 2 or 3 scenarios discuss. And we're working with all of these options and many of these have already been piloted and tested and are ready to be triggered whenever they need to be triggered. Discuss. Thanks, Gupan. The next question is from Vishnu from JM Financial. Dijil. He wants to know that recently telecom companies have launched plans without daily data limits. For Airtel, how has been the traction in such plans? And at a broader level, could this be the way forward for the industry with higher price points, but flexible use effectively guaranteeing us higher price per GB than what we're able to garner? I think the short answer to the question that you asked, Vishnu, is that the traction on these plans is low discuss in the industry and the low for us and I would imagine it's low for the industry. Having said that, I do believe it's the right way forward discuss the current model of a daily quota of GBs, where people are still not using their full quota and therefore consumption is going up without necessarily commensurate increase in ARPU. I mean, the growth in volume and the growth in ARPU are not sort of 2 different lines. Discuss. The one way by which actually you can have a most well architected price structure is really to play to the consumer pyramid in India. And playing to the consumer pyramid in India means that you need to have, let's say, a low, medium, high discuss the type of price point. So let's say you begin at about INR 80 to INR 100, you have a INR 200 plan and you have a INR 500 plan with different amounts of data that are actually thrown in. On the other hand, what's happening in India is for about INR 200, you get 1.5 gigabytes of data, which is 45, discuss 42 gigabytes of data in a month and therefore you don't really need much more than that because the consumption is still only about 18 gigabytes per month. And therefore I think you need us more sensible price structure, more sensible price architecture that plays to the consumer pyramid in India. And so to that extent, I think this experiment is something that we've tried, but with the prevalence of the daily plans, those plans are not as attractive. So unless the daily plans go away, these plans won't work as well is what I feel. Discuss. Thanks, Gupam. The next question is from Pranav Chhatri of Edelweiss. He wants to know that has your addition resume from July. And if yes, what should we expect as far as revenue growth for Q2 is concerned? So I think the answer to your question is June has seen a strong bounce back. April, May was soft because of the lockdown and that really happens discuss. As people consolidate their SIEMs, as people postpone their recharges and you will know that our definition of customers is very stringent, which is based on the last 30 days. So it's not necessarily that the customers really churned, it's just that they've postponed their recharges, maybe they've gone back home, discuss. 2 people in the home are sharing the SIM or have consolidated their spend behind 1 SIM. And so what you normally see is the moment the lockdown lifts, which is what we saw in June. You do see a bounce back. And so you see those customers coming back, although SIMs lighting up again. July It's been a strong month as well. So to that extent, I think it's been good news. Now, I think in August, we made the intervention of the plan from 49 to 79. Discuss. The last time we did this, we did see some SIM consolidation at the lower end of the market, which would show up as churn And this will take about 30 days for it to settle and then September should come back to a normal recovery. So I think I can't give you a guidance for the quarter, but I can tell you that it will be a combination all of these factors, which is a strong June, a strong July, a SIM consolidation in August led out of the discuss price tariff increase at the lower end of the market some months back in September and revenues arising out of this tariff increase flowing through. So I think it will be a combination of all of those factors. Thank you, Gopal. In the interest of time, I'll just ask two last questions. Firstly, any medium term guidance that we can provide on ARPUs? Where do we expect ARPUs to be over the medium term? And secondly, have you ever thought about the emerging Edge of Business given it's a tech services based company and unlocking value there. So again, discuss. Guidance on ARPU is like guidance on revenue. So I'm afraid I can't give you a guidance on that. What I can say is that I hope that in the next few quarters, we do see some rounds of tariff increase, which take the ARPU up closer to 200. I think that will be a good outcome and of course eventually it needs to get to 300. On Etail Business, I think if you look at the composition of Etail Business And this is true not just for us, but across telcos around the world. The enterprise business is really built discuss on top of the wireless business and let me explain that in a moment. The heart of the telecom business increasingly is fiber discuss. And while radios and so on are important, connectivity and providing fiber and large capacities to backhaul traffic is really the heart of discuss. And this is where the enterprise business is really interwoven very, very strongly with the telecom business. This is also true for homes because once you've got fiber up to the tower, from that tower to actually take it into homes or offices discuss the progress we have in the future. Once you invested in the electronics to carry that capacity back from those discuss our central command centers, central core centers. That investment can be defrayed over much of these businesses that ride on top discuss this core infrastructure. And this is why I think the enterprise business is very strongly interlinked with the telecom business. That is on the connectivity. Discuss. Beyond connectivity, where you look at things like cloud communication, cybersecurity and all of these businesses, they could be standalone businesses. Discuss. But the advantage that we bring to the table is that we bring the 4 strengths that I talk about. We bring the data of our customers, We bring the distribution and the access to those customers. We bring the ability to collect money, which is payments. And of course, we have the network, which allows us to extract APIs and provide services like Airtel IQ. The 3rd part of our enterprise business is Nextra, which is data centers. Data centers in a way is a standalone business discuss because really it other than the access to the customer base that Airtel provides, data centers can be spun off completely independently. And this is why we brought Carlyle into our Nextra into our data center business with a 20% stake. So discuss. The rest of the enterprise business I think has a very strong linkage with the telecom business. Thank you, Gopal. I think with this, we will bring this call to a close. Thank you, everyone, for joining the call. A recording of this call will be available on our website shortly. Thank you very much.