Good afternoon, ladies and gentlemen. I'm Rajyita, the moderator for this conference. Welcome to Bharti Airtel Limited S econd Quarter Ended September 30, 2019 Earnings C all. For the duration of the presentation, all participant lines will be in the listen-only mode. After the presentation, a question-and-answer session will be conducted for all the participants on this call. In case of a natural disaster, the conference call will be terminated post-announcement. Present with us on the call today is the senior leadership team of Bharti Airtel Limited. Before I hand over the call, I must remind you that the overview and discussion today may include certain forward-looking statements that must be viewed in conjunction with the risks that we face. I now hand over the call to our first speaker of the day, Mr. Badal Bagri. Thank you, and over to you, Mr. Bagri.
Good afternoon, ladies and gentlemen. Thank you for joining us today for this call to discuss operational highlights for the second quarter and half-year ended in September 30, 2019. W hich we announced yesterday. Present with me on the call today are Gopal, Harjeet, Nakul, and Komal. This is a slightly unusual call as our full set of results are not yet available. As you are aware, the board of directors of Bharti Airtel, upon the recommendation of management, have decided to defer the deduction of second quarter and half-year results until 14 November 2019, on account of needing more clarity and time to assess the full impact of the aging of matters following the recent judgment of the Honorable Supreme Court.
However, in line with our consistent policy of timely disclosures and maintaining the highest standards of corporate governance, the company has filed with the Stock Exchange a limited set of operating data for the second quarter and half-year ended September 2019, which was reviewed by the board. These operational highlights provide the underlying drivers at work for each of our area segments and businesses, reflecting the trends at an operational level. Equally, we wanted to go ahead with this call to answer any questions that you may have on the business. Given the fact that the financial disclosures are yet to be made public, the call today will be focused only on the operating data and the underlying drivers. As you can appreciate thereby, we will be unable to answer any questions which pertain to financial information and which has not yet been disclosed in our filings.
Before I go on to discuss the operating environment in detail, I would like to take a few moments to discuss the AGR matter itself. Clearly, as mentioned in our press statement, we are disappointed by the verdict of the Honorable Supreme Court. The issue of the scope of the AGR decision has been through several rounds of litigation, with several judgments which had been in favor of the operators till now. This decision has come at a time when the sector is facing severe financial stress, and it further weakened the viability of the sector as a whole, when the operators have invested billions of dollars in developing the telecom sector and providing world-class service to our customers.
We understand that the Department of Telecom appreciates the chills faced by the industry and has formed a high-level committee of secretaries to review the situation and financial stress of the sector as per media articles. The sector as a whole, including ourselves, needs to revalidate the amounts involved with the department and also expect reasonable relief to deal with this adverse outcome. It is indeed in the best interest of all the parties to formulate a constructive mechanism to ensure that large levies, including the swamp at hand, can be resolved in a fair manner. We are also evaluating the judgment in detail and its overall implications, and accordingly request you that we will not be able to comment on it much or take any questions on this matter as of now. Moving on to business performance, let's talk about our mobile business.
The broader industry, having now consolidated to three large players, continuously see some sense of stability. Continuing on the sequential growth trend that we witnessed in the past quarters, mobile revenues sustained their growth trajectory this quarter as well by growing 1.1 percentage points. What is also noteworthy is that this growth is despite the shutdown in Jammu and Kashmir; otherwise, the feeling would have been higher. I must also add here that given the Tata customers were also always roaming on our networks, the revenue growth that we have reported is the underlying organic growth of the quarter. This is truly a feat for the second quarter, which you are well aware tends to be a seasonably weak in the context of mobility business in India. This, in fact, is the positive reversal in the quarter two trend after nearly six years.
Overall, this growth has been led by our focus on quality customers, prudent tariff tweaks, including some intervention on the minimum output side, and upgrading on account of aircraft tax. Our tariff offerings continue to remain pro-consumer, transparent, and non-discriminatory to any network, and we take pride in putting our customers' needs and convenience at the heart of our offerings. Starting 1st of July 2019, we have consolidated the consumer mobile business of Tata Teleservices Maharashtra Limited and Tata Teleservices Limited. We have been able to seamlessly integrate and network with consumers, and I've also been able to hold on to the revenue. Our overall subscriber base number was also impacted due to the shutdown of mobile services in Jammu and Kashmir during this quarter. We are hopeful that with the ban now lifted, these customers will again be active on the network.
Our 4G base continues to grow, and we added around 8 million customers during the quarter. With this, we now have over 100 million customers on 4G. Our focus on quality customers is also evident from the best-in-class operational parameters. Our ARPU is now at INR 128, including Tata, which had much lower ARPU subscribers. On a like-to-like basis, the ARPU was flat quarter-to-quarter at INR 129. The network continued to witness strong engagement of the subscribers, as the monthly average data usage from the customer base is again the industry-leading at 12.8 GB per month. On the network front, we added more than 2,900 sites during the quarter and more than 18,000 mobile broadband base stations. We also further added capacities across the network through additional sectorization and massive MIMOs.
In line with our strategy of reforming 900 megahertz band for 4G, we completed the reforming across all the 10 circles with continuous 900 megahertz band, adding to incrementally higher capacities for 4G and 2G. Further, we completed 3G shutdown in Punjab and Haryana this quarter after shutting down Kolkata in the last quarter. Our efforts toward network experience have shown results. As per OpenSignal's October report, Airtel has been rated as the network with the fastest download speed experience and also winner in terms of video experience on the network. At the recently concluded India Mobile Congress, we demonstrated live 5G in 3.5 gigahertz and millimeter wave band on commercial smartphones, Wi-Fi, fixed indoor CPEs. We also demonstrated industry vertical use cases for manufacturing, mining, media, smart city using private 4G/5G networks and video analytics.
Talking briefly about other businesses, digital TV services business continues to grow on the back of customer additions and increasing upgrades to premium plans. This quarter, we added around over 180,000 customers. ARPU improved by INR 5 from 157 to 162. The total base now stands a little over 16.2 million as at the end of September 2019. We also announced the launch of our converged digital entertainment play, Airtel Xstream. This is part of Airtel's vision of building a world-class digital entertainment ecosystem. This offering affords the availability of a wide array of unmatched content on one platform, but available across screens, while also creating a future-ready platform for connected homes. It caters to the needs of new generation of consumers who are looking for seamless and converged entertainment across multiple screeans at home and on the go.
The product has taken off to a very strong start, and we are hopeful of scaling it up even more. Airtel business reported a 3.8% sequential growth in revenue. The business continues to grow, led by the demand for connected data centers and solutions across the spectrum. Home broadband revenues came a little softer, however, we continue to invest in the business and roll out home passes at an accelerated pace. Equally, we have simplified our pricing points to provide more benefits and value to consumers. ARPU in the current quarter has shown a slight dip, possibly due to certain one-off items in the previous quarter, however, we should take the current trends to be a reasonable representation of the underlying business. Moving on quickly to other noteworthy areas. Regulatory matters.
The TRAI has come up with a consultation paper on review of interconnection usage charges, which is in line with what TRAI said back in 2017 when they had reduced the charges. We support this review, as we believe that the estimated nature of traffic, along with a large base of feature phones in the device ecosystem, coupled with large investments made on networks, means that the cost to carry a call is above the current IUC. We have submitted the comments on the consultation paper and have firmly recommended that the opportunity to wait for zero termination charge regime be moved by at least three years. Moving on to M&A. As previously mentioned, the merger of Airtel with Consumer Mobile business of Tata has become effective from July 1, 2019. Consequently, all customers, assets, spectrum, and agreed liabilities of these businesses shall merge with Airtel effective July 1.
The scheme of arrangement between Airtel and Telesonic for the transfer of optical fiber cable business has become effective August 1, 2019. Lastly, from Infratel, as you would be aware, the board of Indus Towers has approved the extension of the long-stop date for the proposed merger with Indus by a period of 60 days. The matter is pending required approvals, and we await the finality of the same to be able to comment any further on this matter. To sum up, the telecom industry in India continues to witness huge expansion in data and voice along with IT recovery. Our non-mobile businesses continue to expand at a heavy clip, and Africa remains on its profitable growth journey. Overall, business-wise, our investments remain strong. We are hopeful that the government will take a balanced approach on the AGR matters to ensure the long-term viability of the sector. With this, we open up for questions and answers.
Thank you very much, sir. We will now begin the question-and-answer interactive session for all the participants who are connected to the audio conference service from Airtel. Due to time constraints, we would request if you could limit the number of questions to two to enable more participation. Hence, management will take only two questions per participant to ensure maximum participation. Participants who wish to ask questions may please press Star 1 on your touch-tone-enabled telephone keypad. On pressing Star 1, participants will get a chance to present their questions on a first-in-line basis. To ask a question, participants may please press Star 1 now. The first question comes from Mr. Manish Adukia from Goldman Sachs, Mumbai. Mr. Adukia, you may ask your question now.
Yes. Good afternoon. Thank you for taking my questions. First question, just on the customer environment in the industry, yo ur overall customer base seems to have stabilized in this quarter but are you still seeing some churn to Jio Phone because they seem to have amassed more than 70 million customers as of now? What is your estimate of the incremental share in smartphone adds every month? My second question is on Jio, which recently announced new tariff plans that seem to be priced higher versus the earlier plans. Does this give you room to raise tariffs on your own network, and how are you thinking about this? Just lastly, while we appreciate your comments on the AGR issue, can I just ask what kind of outcome are you hoping for from the Government of India because the Supreme Court has only given three months, as we understand to pay this amount? Thank you.
So Manish, this is Gopal. I think on the competitive environment at the bottom end of the market, we have been impacted with the advent of Jio Phone, where there has been some movement away from our feature phone customers to Jio Phone. Recently, also, you would have seen that there was a significant price drop on that particular phone t hat has continued to put some pressure on feature phones. As we have said, our focus is really to upgrade to smartphones, and that's really where the entire business execution is currently focused on. On the new tariff plan, we've always maintained that tariffs are unsustainable and are low and must go up. We have had many movements to actually increase tariffs. We have historically been at a premium to our competition in terms of pricing.
The only thing that we would like to do is not to take temporary price movements led out of regulatory changes or regulatory issues, but really look at more sustained pricing increases. The current move, as we understand it, is a tariff only meant for offline calling based on regulation. If the regulation were to unpeal, then that tariff would go away. Therefore, we have not made any decision to respond accordingly. On the third question, I think Badal has already mentioned that we've seen media articles that the government is pleased with the matter, and a group forming secretaries has already been formed. We will await to hear the outcome of this. I think there's no point getting ahead of ourselves and speculating as to what could or could not happen.
Right. Thank you so much, Gopal. Just a quick follow-up question. On the lower end of your customer base, feature phones, would it be safe to say that only one third of your revenues on the wireless business would still be coming from the lower end of the feature phones? That's number one. Second, again, on the AGR issue, while I agree that it's probably too early to comment on what the outcome would be, again, because the timeline is pretty short from what the Supreme Court has indicated, from an Airtel standpoint and from a liquidity standpoint, how are you thinking about the next two or three months, irrespective of what the new committee decides?
On the feature phones, it depends on the circle. There are circles which still account for maybe 50% of our revenues, and there are other circles which account for 20% of our revenues. It is a kind of a mixed bag. On the second point, like I said, I think before knowing the full outcome of what the requirement is and what any relief may be forthcoming from the government, I think it would be premature for us to talk about liquidity and funding requirements. I think let's take it one step at a time is how I would put it.
Got it. Thank you so much. All the best.
Thank you very much, Mr. Adukia. The next question comes from Mr. Pranav Kshatriya from Edelweiss Securities, Mumbai. Mr. Kshatriya , you may ask your question now.
Hi. Thanks for the opportunity. I just wanted to allude to your opening remarks, in which you said that because Tata subscribers were already on the network, hence there is minimal impact. Just wanted to check whether there is any impact on the subscriber addition, what we are seeing? If yes, what is the amount? I also would like to know that churn is coming down meaningfully. Do you think that this low level of churn is sustainable, and how are you seeing that?
Like Badal mentioned, I think the revenue that was reported last quarter already included the Tata component because there were roaming arrangements that we had with Tata. As far as customers are concerned, we were able to acquire about 6-7 million customers, about 6.5 million customers from Tata. At the same time, we lost a number of customers running into almost 2.5 or 3 million in Jammu and Kashmir. This loss is not a permanent loss because of the way we define our revenue on customers. It's a revenue that's earned in the preceding 30 days. This will come back the moment prepaid services are switched on. That's really what's happening in the course of the quarter. One of the reasons why the ARPU has slid by one rupee is that the current customer comes at a substantially lower ARPU.
Okay. I mean so that seems that the subscriber addition was more or less flat and zero subscriber addition broadly for Airtel standalone phone ?
Organically, yes, you're right, during the quarter. Having said that, I think to your last point on your question on churn, I think we are really focused very heavily on churn. We have a bunch of 10 levers that we've identified to radically drive down churn. There's also a substantial amount of SIM consolidation that's happened in the market with three more or less equal-sized players, and the combination of both will mean that these churn trends that you're seeing of reduction from last quarter to this quarter is a sustainable trend. We are pleased with the fact that the churn has actually come down. We will continue to work towards bringing it down further.
Thank you. That is it from my side.
Thank you very much, Mr. Kshatriya . The next question comes from Mr. Sanjay Chawla from JM Financial, Mumbai. Mr. Chawla, you may ask your question now.
Hi. Good afternoon. Thank you for the opportunity. My first question is, in regard to the AGR definition, I mean, do you see any issue in terms of the AGR definition in respect of DTH license fee computation? Because now that is also the way of revenue net of content cost. Do you anticipate any issue there potentially? That is the first question. Secondly, Jio has also now introduced these all-in-one packs. This is effectively tariff hike, although the driver could still be termed as IUC or regulatory. Can you just talk a little bit about the potential tariff-like constructs for yourself now that Jio has introduced these all-in-one packs?
Hi, Sanjay. On the DTH fees, the matter is in the court. It is unpredictable. It will be very difficult for us to comment on it. However, we do not see any risk as far as DTH is concerned from a definition perspective.
Is there any pressure? Has the DoT approached to pressure with regard to this netting of content cost as well?
No, they have not, Sanjay. Nothing as of now.
Okay. Yeah.
Sanjay, on the price part, I've already talked about it. I think the way the pricing has been done by one of our competitors is to charge for offline calling. That is both available on a per-minute basis as also on a bundled basis. For different plans there are different amounts of minutes that have been bundled in. With a promise to customers that if the regulation changes, this will unwind. Therefore, we do not see this as a tariff increase. We see it as passing on a current regulatory charge to customers, which is, in effect, a bilateral charge between operators. We are not doing anything about it. We await the consultation of the TRAI paper, and then we will take appropriate action.
Gopal, do you also see the fact that your tariffs have been at a premium, as you mentioned, as some sort of a hurdle in capitalizing on this potential opportunity?
No. That has nothing to do with it. I mean, historically, we've been at a premium, and the reason we've been at a premium is simply that our strategy is to really win with quality customers. We believe that we are well on course to executing on that strategy as reflected in all the programs that we are running, whether it's at our banks, it's the sustained increase in ARPU that we've seen over the last three quarters, it's the move to shed some of the bottom-end customers by having a minimum charge. All of those are consistent with it, and we will continue to do what it takes to drive that strategy.
Okay. If I could just squeeze in one question on the ARPU sort of stability that we have seen in the second quarter, what exactly has driven this ARPU stability in terms of the fact that the seasonality was rather pronounced this year?
I think there are three things I would say. One is the upgrading from bottom-end packs to bundles. I think that's one. As people move to 4G, they come at an improved ARPU. The second is at our banks, as more and more customers come onto the platform, we see an increase in ARPU because we have digital hooks to actually upgrade them. The third is some tweaks that we have done on the minimum recharge plans with the incoming being extended for 7 days rather than 14 days after the expiry of the recharge.
Okay. Got it. Thank you very much, and all the very best on the AGR issue. Thank you.
Thank you very much, Mr. Chawla. The next question comes from Mr. Kunal Vora from BNP Paribas, Mumbai. Mr. Vora, you may ask your question now.
Yeah. Thanks for the opportunity. First one, Jio has raised challenge to its indirect while you are not looking to respond to this immediately. Do you see a potential for slightly better market share or higher share of growth additions in the short term than the time Jio reverses it? That's one. Second one, data volumes have been fairly strong, almost more than 80% increase over the last year, and the usage also has been very high in GB. How is the network utilization now, and at what point do you see a need for additional spectrum? That's the two questions.
I think on the first question, I think it's early to say because that's really what we are what the three results will reflect, what happens there. I will not comment on that right now. On the second part of it, our utilization has historically been around 60%, as you mentioned. What we started doing, as Bharti talked about, is shutting down our 3G networks. Across Punjab, Haryana, MP, we've already done. By March 2020, I mentioned in the last quarter as well that we will progressively shut down our 3G networks and pretty much migrate almost all of our 3G spectrum to 4G. That will give us a substantial headroom to continue to grow data. The other part that we're doing is actually densifying our networks. On existing base stations and existing towers, we're putting in a fourth sector or a fifth sector, and in some cases, massive MIMOs, splitting beams, and so on and so forth. All of that also helps us densify networks. I would say there is still sufficient headroom for us to continue to grow our data usage without the need for any spectrum.
Sure. That's very helpful. Just one last question. On the broadband business, you designed a 5G token in ARPU. Did you take any pricing intervention? Have you lowered prices ahead of Jio launch? Are you seeing any impact of Jio broadband launch in any of the markets?
At other extremes, I think we had some one-off in the prior quarter, not the quarter two. The prior quarter on ARPU, it showed a slight increase. What we are seeing right now is the underlying ARPU. Our pricing has been dramatically simplified. We've moved to four to five pricing plans. One thing that I can confirm is that through these pricing plans, the acquisition ARPU that we are doing, which historically tends to be much lower than the existing ARPU, has now seen a good uptick. That bodes well for the business. Finally, from a competitive standpoint, every competitor, there are different competitors in this market in different markets with very different types of price plans. We haven't seen any significant increase in competitive intensity compared to the prior quarters as far as this quarter is concerned. The business continues to grow, I would think, at a very modest rate in terms of customer ads, and we would like to actually press on that pedal further.
Sure. That's very helpful. Thanks.
That's it. Thank you very much, Mr. Vora. The next question comes from Mr. Rajiv Sharma from SBI Caps, Mumbai. Mr. Sharma, you may ask your question now.
Yeah. Thank you for the opportunity. Just a couple of questions from my side. With this AGR verdict, how will it impact the license fee payouts and the spectrum usage as payouts in these quarters to come? Like-to-like basis, what could be the potential increase? Second is, I understand that we don't want to speculate on what the outcome of the committee will be, but what inputs you've got from your legal experts or team in terms of what is that government could do and what is your wish list which you are, which Bharti is talking to the government and the secretaries?
Rajiv, on the impact, while we didn't go to comment on it, incremental impact on our existing financials will be marginal. This is whatever accounting approach we generally carry and according to principles which we have established. It is not a substantial implication incrementally going forward. Until there is one-off non-telecom income which comes by way, which will always be an exception. On what the expectations are, I think we have been fairly clear. We have made fair representations in various forums and through TUI. The expectations are all there in front of the government. We have to now, instead of I would wait to hear from the government to see what action possibly can be considered by them.
I'm trying to understand these penalties and the taxes and interest-on-end penalties are the major burden rather than the base amount. Given that this litigation has been long for 14, 15 years, can you help us, while in a sense, as to from when these penalties have been computed, and is there a room or headroom for DoT or the regulator to be more lenient there?
Rajiv, the penalties and the interests are being computed from the financial years from which the assessments are being done. If there is a demand for year 2006 and 2007, the interest is computed since then. Penalty is laid as of that date, and interest on penalties is computed since then at this particular point of time. Is there room for consideration out there? We definitely feel there is substantial room for consideration since this matter has been under litigation for so many years. Several bodies have interpreted the same definition in very, very different ways. There have been judgments which have been in favor of the service providers. Definitely, there is room for consideration, a fair amount of consideration on all of these aspects.
Will DoT take a call on this, or will it be the Apex Court which takes a call on the amount?
Rajiv, it's very difficult to say who's going to take a final call, but DoT definitely is going to compute the amount. Whether a consideration can be done for those amounts or for any one of those elements, very difficult to say who is going to take the final decision on that.
Lastly, 35% market share, Gopal, can you throw color as to when we are targeting this and how you want to go about it?
Sorry, what is that target that you're referring to? I'm not aware of this.
There are some reports where you mentioned that you're looking at 35% revenue market share?
I've not mentioned any such thing.
Okay. How do you see revenue market share panning out for yourself over the next four to five quarters?
I think our focus, as we mentioned, is our strategy is quite clear. Market share, we believe, is a strong barometer of performance. The more important thing is what are the underlying drivers to gain market share. I think over the last couple of years, we've held well. We've grown market share. For us, the underlying drivers are more important, and that is really a function of two pivotal strategies. One is our obsession around quality customers and really winning with quality customers, reducing our churn and making sure that we drive a whole bunch of services to create stickiness with them. To deliver a really strong network experience, for which I think we've made substantial investments, reformed spectrum, moved the 50 GHz band to 4G, shutting down 3G networks, and of course, continuing to make the investments that are required in a smart way. OpenSignal recently showed that we are the best performance in terms of video experience as well as speed. All of those are moving in the right direction, and that, I think, is important for us to actually drive the objective of growth and market share.
That's very helpful. Thank you.
Thank you very much, Mr. Sharma. The next question comes from Mr. Sanjish Jain from ICICI Securities, Mumbai. Mr. Jain, you may ask your question now.
Yeah. Good afternoon, and thanks for the opportunity. I've got just one question on this Tata Tele revenue. I was trying to reconcile the number which Tata Teleservices has disclosed in the previous AGR report, where if I add the circle-wise AGR plus NLD, it comes to around INR 3.3 billion. We have not gained anything with what we are now disclosing in this quarter, but I just wanted to understand the math behind it?
Sanjesh, we can take this question offline. Broadly, the startup really may have enterprise business and other businesses which have not come to head end. The numbers may not be like-to-like comparable. AGR is a solution of all circles, and there will be revenue across amongst circles as well. Hence, that may not be comparable. We can take this question offline.
Sure, sure, sure. That would be helpful. Thank you.
Thank you very much, Mr. Jain. The next question comes from Mr. Varun Ahuja from JP Morgan, Hong Kong. Mr. Ahuja, you may ask your question now.
Good afternoon, gentlemen. Thanks a lot for taking the questions. Firstly, I want to ask the long-term date extension for the Tower merger. Could you just explain whether it's more to get the regulatory approvals or whether there's scope for more discussions with you over the phone? That's my first question.
Do you want to ask a second question as well? We can take another question.
Yeah, sure. Sure. The second one is, I think similar to one of your bonds, if you could guide whether the existing bank loans have any covenants that come into play, obviously subject to the retailers.
So Varun, I'll take the first one. This is Nakul. As Bharti Infratel has also disclosed to the stock exchange, the board of directors in their meeting on 24th of October 2019 have accepted the committee of directors' recommendation to extend the long-term bid by 60 days. On the basis of agreed-on closing adjustments and other conditions preceding for closing. Based on the next date as of 30th of September, as was mentioned, such agreed closing adjustments expected that the dilution of equity stakes held by the current shareholders of Infratel should be lower than the account of lesser number of shares that should be issued due to scope of interest shares. Such completion of the merger is conditioned upon various approvals which we've alluded to in the past and also fulfillment of certain other conditions precedent. However, there can be no assurance that this can be completed within the due time. This is what we would like to say on this as of now.
Can I ask you, sorry, just on this—
sorry, carry on, Varun.
Y es, sorry. I mean, on this, can I ask you that whether the share price has moved a lot and we are all reading the media reports, is there any way that, I mean, from your perspective, it seems like it's all mathematical formula that has been agreed to. But let's say if the other parties, for one reason or the other, don't agree to it, is there any kind of penalty that they would be imposed if they decide to actually walk away from this?
Varun, this is Harjeet here. The scheme of the merger is duly filed with NCLT. It has all the provisions there. Is it appropriate to comment outside of the scheme? Theoretically, all such transactions have a settlement risk. It is unlikely that given the recent discussions both the counterparties have had on extending the long stock and associated whatever closing adjustments we have to do, it is unlikely it should cause any change. I would say all of that is a part of the NCLT scheme. We hope to get the approvals and then take this forward in the coming few days or weeks.
Got it. Second question regarding the covenants.
Yeah. Varun, again, Harjeet here. Ratings-related covenants are not there in any meaningful way across the debt facilities and bonds that we have, but for a small portion, sub-portion of a bond which is outstanding in Airtel Africa, which Airtel Africa is carrying substantial cash reserves. That also is a debt equivalence covenant, not a breach. Having said that, I think in general, the covenant philosophy with the relationship bank market and the loan market that we access away from the bonds, bonds for all the investment-grade package, carry a leverage-based covenant. Clearly, from the perspective of where we are, including the potential and evolving implication of AGR, we will need to assess all of these as we go along. Today, from a ratings perspective, we do not expect a high level of sensitivity, but clearly, credit appetite, cost to access the appetite, all of that gets impacted. That is why some of the evolving implications of the judgment that we have had on that merge makes it needed to watch carefully.
All right. Thank you very much.
Thank you very much, Mr. Ahuja. The next question comes from Mr. Rohit Chordia, from Kotak Securities, Mumbai. Mr. Rohit, you may ask your question now.
Yeah. Hi. This is Rohit. I'll just add one quick question on the 3000% and all the impacts of the AGR outcome. Assuming the worst case stands out, there is no relief that is forthcoming, does this impact your investment plans in any case, in the case if you're looking to go on the network side, etc.? Would you have to have a relook at that at all? The second order effect, dividends from Bharti Infratel, would you have to restructure a little bit to ensure that there is no license fee and SUC leakage on that? Since you could just comment on some of these aspects, assuming the worst case stands out?
Rohit, I do have a few questions. Sorry to interrupt in a way with the wheel here. I think on this matter, as Gopal also earlier mentioned, we have to be respectful of the situation. It's the Honorable Supreme Court judgment on one side. We have to be respectful also of the government's senior chartered officials committee that has been formed to kind of review this. It is probably not right for us to keep commenting on what we expect or what can happen. I think it is difficult. It's an awkward situation for us. I hope you appreciate. On a broader theme, what you're saying is clearly when the impacts of such unprecedented situations come on any industry, and these are more or less industry-level impacts excluding one or two players. I think in that situation, the industry reassesses what is happening. To that extent, the more or less adjustment being done at an industry level is not a meaningful competitive dynamic change. You have to see which one is weaker, which one is stronger, and how does that play out. We do not want to comment about how things are in the industry, but that is an element of plan which we have to do once the certainty of how this is evolving is in our understanding. Allow us to sort of live with this for the moment and understand how this is evolving, and maybe then we can catch back as more clarity comes on this aspect .
Okay, I hope to get an answer in January maybe. A nyway, quick, more of bookkeeping kind of question. If you could help with some numbers on how many smartphones are there in your network where you're perhaps still the second fence. Is that regarding sizable numbers?
Yeah. No. First of all, A, we do not disclose this number. B, it's also very difficult, and it has to be a very indirect form in which we will be able to assess where we are potentially a second fence. I can tell you that that number is not sizable. This is whatever assessment we have done. It's not sizable.
Understood. Thank you very much. All the best.
Thank you very much, Rohit. The next question comes from Mr. Vivekanand Subramaniam, from Ambit Capital, Mumbai. Mr. Subbaraman, you may ask your question now.
Yeah. Hi. I have a couple of questions. On the ARPU side, you mentioned that like-for-like things are flat, and you outlined the underlying drivers of ARPU change. Could you also discuss the ARPU trends on the post-trade side and how you see the competitor participating there? Second question is on whether you are also considering shutting down of 2G sites in places where your VoLTE traffic is significant. While answering this question, it would be great if you can comment on the proportion of VoLTE traffic that is now on VoLTE and how quickly it is changing. Thank you.
On the post-trade side, I think our ARPUs, after a substantial amount of downtrading that we've seen for about seven or eight quarters, for the last couple of quarters, have been kind of holding steady. Our pricing on post-trade is at a substantial premium over prepaid, and we have to continue to add customers, and Astana is quite comfortable there. 2G, there is no plan to shut down because even in circles like Delhi, there is a substantial amount of 2G revenue that is still around on 2G networks coming only from 2G phones. Secondly, there is a leakage of VoLTE and 4G devices on VoLTE because there are two or three things. One is the 4G device having a VoLTE configuration, which is something that the device manufacturers need to do. All the new devices coming in for the last 12 months now have this configuration. The devices that are older do not have it. The second is that VoLTE then needs to be switched on the device and customers switch it off. The third part is then to provision those customers. All of these lead to some leakage, and there needs to be some kind of fallback. This is the reason there is a small slug of spectrum on 2G, which actually takes back this leakage. The reason we were able to shut off our 3G networks was that the revenue from just 3G devices was very, very insignificant in the low single digits, and therefore, we took the call to shut that off. 2G will still have some runway for the next few years.
All right. Thanks for the detailed explanation. One small follow-up on the postpaid side. You mentioned that the customer addition remains healthy, and you also outlined in your Honorable Report at great lengths about the adult hands. Is this program more successful on the postpaid side in resulting in upgrading, or is it indifferent? Are the customers indifferent in upgrading in postpaid versus prepaid?
I think the impact of upgrading on adult hands is more on the prepaid segment than on the postpaid segment because once a customer opts for a postpaid plan, they don't make shifts every now and then. The switch from one plan to another happens after a lot of thought and deliberation, and that's when they make the switch. It is a lot more on the prepaid side.
All right. Thank you. All the best.
Thank you very much, Mr. Subramaniam. The next question comes from Ms. Sharon Chen from MetLife, Hong Kong. Ms. Chen, you may ask your question now.
Hi. Thanks for taking my questions. Just a couple of questions. The first one is in terms of your liquidity. Can you tell me how much cash and undrawn bank facilities you have available? Are these bank facilities committed? The second is in terms of the company's legal options. At this stage, is the plan essentially to accept the court judgment or is a petition for review on the cards? Thank you.
Yeah. I'll just repeat that again. On your first question, I think reading committees are also getting set up. They are assessing how basically the information they have on how the situation is. I can tell you exclusively ring-fencing this particular AGR situation. You had a rating category. You had the liquidity assessment, and those assessments stand. The issue is clearly ring-fenced to the event of any large payout coming out of this recent judgment. For that, as I mentioned earlier in one of the comments, since the Honorable Supreme Court has made a judgment, and we also understand that a committee of senior government officials is looking at what needs to be done towards the telecom sector, I think it would be appropriate only to comment what that event and thereby its implication means both in terms of access to further credit and thereby on our overall ratings and liquidity situation. Ring-fencing that, we have a fair amount of existing flow of liquidity as well as capital access. The event is what needs to be watched for.
Sorry. Can you just give me the numbers of excluding that event, how much cash and unworn bank facilities do you have available?
I think a fair assessment of the cash is sitting in the June 2019 results so far across Africa and India. It would be about, both including our tower companies, it could be over $2 billion, maybe $2.3-$2.4 billion. The tower company is free cash flow positive, as you very well know. Little Africa, in their earnings call and release, they have generated free cash flow for the quarter that continues. India is just about free cash flow neutral depending on how the quarter goes for the CapEx. In general, that is the cash situation. Access to bank lines, bond markets, etc. is a rating come credit appetite-based issue. If you see our overall debt that June 2019 results show, you will see significant debt has been part of the DoT spectrum liability. Another portion of debt is finance lease obligation equivalent debt. The pure market debt is about $7 billion-$7.2 billion as of June. Of that, as you very well know, bulk of that $7.2 billion is bonds outstanding. There is bank-related appetite. Having said that, as I said, that is business as usual. This particular event being slightly unusual, it should be assessed in its particular ring-fenced way.
Okay. Do you have any committed undrawn bank facilities available right now?
I cannot comment. I think this is something which is not there in our usual financials otherwise. It would be slightly out of the ordinary to comment on that. All I'm saying is business as usual has strong continuity available. It's the event that needs to be assessed and looked at for what that impact is.
Okay. In terms of my second question?
Yeah. On the legal option, all options are being evaluated. It's going to be premature for us to comment on our course of action on the call, but suffice to say the company will do whatever is required and whatever deems fit from a legal course of action on this matter.
Okay. Thank you.
Thank you very much, Ms. Chen. The next question comes from Mr. Bharat Shettigar from Standard Chartered Bank, Hong Kong. Mr. Shettikar, you may ask your question now.
Thanks for the call. First question is with respect to the Africa refinancing I think given that Africa has lifted now, there were some talks or some plans that eventually the debt there could get refinanced without a parent guarantee. Any thoughts on where we stand with that issue? That is number one. Second is probably something a bit more simplistic on the AGR issue. In terms of the Supreme Court judgment, what is the exact amount that the Supreme Court has asked to be paid in the next 90 days? The reason I ask is there are slightly conflicting reports that it probably also includes the spectrum usage charges. Can you confirm the exact number?
Yeah. This is Harjeet. I will take the first one and request Badal to take the second one . On the first one, Africa refinancing, I think most appropriate for our listed Africa board and management to comment. I'm picking up from what their comments have been in this quarter and sort of relaying it back. That intent to refinance the parent guaranteed outstandings in Little Africa continues to be there. Little Africa by itself as a credit is getting evaluated for its own rating category and/or independent credit access from the bank market. That includes credit access in the operating company who's also at the holding company in London and the Netherlands. Clearly, all of that process is in play. Over the course of next few weeks or months, that refinancing exercise, to the extent it is necessary and right to do, will be done. At the same time, because of the fact that overseas parent, which is Little India, had better credit rating, it has economic benefits on the other side. The Little Africa board, its management, are deciding what is the best strategy. Intent continues to be refinancing all of these guaranteed bonds out over the course of the next few weeks and months.
As on the second question on AGR, as you would be aware, that the judgment is a principle-based output, which has been obtained from the Supreme Court. It is deciding on the principles of adjusted gross revenue. It has not really quantified a number in their judgment. The number has to come from DoT, and we need to then assess and understand those numbers better. That is actually one of the reasons why we have sought time for publishing our financial results.
Okay. That is very clear and precise. Thank you very much.
Thank you very much, Mr. Shettigar. The next question comes from Mr. Aliashar Shakir from Motilal Oswal, Mumbai. Mr. Shakir , you may ask your question now.
Yeah. Thanks for the opportunity. I just had one question relating to this earlier acquisitions of Tata Tele and Telenor we have done. Does the license fee fall on us or the M&A agreement is clear that the obligation is on the seller?
The obligations of Tata Tele merger or Telenor does not come to Bharti Airtel. It is absolutely explicit in the M&A agreement with them.
Okay. That's very helpful. Thank you so much.
Thank you very much, Mr. Shakir. The last question comes from Ms. Richa Negi from Goldman Sachs, Bengaluru. Ms. Negi, you may ask your question now.
Thank you. Hi. Good afternoon. I understand the failure issue is your top priority, but wanted to understand if there's any plan to continue delay everything and/or proportionately tender senior bond? That's all from my side.
Richa, I will concede. I think this answer has to be looked away from this spectrum event which you mentioned. I think that event does change the entire plan and the strategy to the extent it has impact. That is why we are in the wait-and-watch mode to see how that impacts. If you for a moment isolate that event, all our stated intent bases the free cash flow generated on a global basis, bases our intended and publicly stated asset monetization opportunities. The intent is to create a more conservative leverage profile than what existed on June 2019. Having said this, the fact that this new event has come in, I think this will need to be dovetailed into how that strategy now plays out. To that extent, I can't comment how the evolution will be from where we are. Excluding that, that intent of using asset monetization and other opportunities, we think that may still continue.
Okay. Thank you. Thank you so much.
Thank you very much, Ms. Negi. At this moment, I would like to hand over the call to Mr. Badal Bagri for the final remarks.
Thank you all for joining the call, and look forward to engaging with all of you during the course of this period and definitely talking to you next quarter.
Ladies and gentlemen, this concludes the conference call. You may now disconnect your lines. Thank you for connecting to Audio C onference service from Airtel, and have a pleasant evening.