The participants from one of 840 conferences will participate in the first conversation in June 30th, 2019, on this call for the duration of the presentation. All participant lines will be in a listen-only mode. After the presentation, the 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 discussions today may include certain overlooking 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. Bharti Bagri. Thank you, and over to you, Mr. Bagri.
Good afternoon, ladies and gentlemen. Thank you for joining us today for this earnings call to discuss the results of the first quarter of June 2019, which we announced yesterday. Present with me on the call today are Gopal, Nakul, and Kohli. Before we proceed further into the call, I wanted to highlight that, as you would be aware, Airtel Africa has been admitted to the premium listing segment of the London Stock Exchange, along with a parallel admission on the Nigerian Stock Exchange. Consequent to the dual listing, Airtel Africa has now assumed an independent status, having its own empowered board and management, which will be responsible to its shareholders for the performance and the governance of the company. While Airtel Africa continues to remain a subsidiary for Bharti Airtel Limited, henceforth, our earning call will be limited to India and South Asia.
Airtel Africa will conduct its own earnings call for the benefit of its investors, as of this time. The transcript of the same is available on the website airtelafrica.com. As you're aware, the Ministry of Corporate Affairs notified the legal standard Ind AS 116, which replaces the existing standard Ind AS 17. Ind AS 116 is applicable to all companies with effect from 1st of April 2019, and our financial statements have been prepared in accordance with the same. Under the earlier standard, operating leases were treated as expenses, whereas under Ind AS 116, all long-term leases, whether operating or finance, are required to be recorded in the balance sheet. Thus, our leasing agreements with network sites and network sites, along with transponders, offices, retail stores, etc., which were being expensed till last quarter, will now be capitalized, resulting in depreciation costs and interest expense on a discounted rate.
This has impacted our margins and key financial ratios, and therefore, they are not comparable to prior periods. However, in line with our standards of highest corporate governance, we have also provided a proforma of the underlying financials. Another key reporting change implemented this quarter is on our ETF segment. Subsequent to the implementation of the new tariff order, the service providers are responsible largely for retransmission and not in a position to control the pricing of the content in this history. Accordingly, only the margin earned from the broadcasters for distribution of the content is considered as revenue. Moving on to business and performance, let's talk about our wireless business first. The broader industry, having now consolidated to three large players, continues to see some semblance of stability.
Continuing on the 4.3% sequence of growth that we witnessed last quarter, this quarter, mobile revenue is growing by 2.2%, led by our focus on quality customers, proven tariff peaks, and upgrading on account of rightful times. But we have witnessed revenue growth at this peak, any outright tariff increase. We continue to believe that prices need to move up in the long term to ensure industry viability. We will recollect that last quarter, mobile margins benefited from certain runoffs, and the underlying margins were close to 22%. Underlying EBITDA margin for the mobile segment stood at 23.2% for this quarter. Our 4G growth continues to grow, and we added almost 8.4 million customers during the quarter. With this now, we have 120 million HSM customers, of which more than 95 million are on 4G.
We do believe that the 4G handset penetration still has a significant headroom to grow, and therefore, for the foreseeable future, India will be largely a 4G market. However, the pace of handset adoption has remained stagnant, rather slowed down in the last few quarters due to high prices of the handset and adverse currency fluctuations impacting the cost. We are hopeful that the pace of 4G adoption will accelerate, and this next change will be a positive catalyst for us. Our focus on quality customers is also evident from the best-in-class operational parameters. Our RPU are now at Rupees 129. Real, our customer base is 99% plus, and the monthly average data usage of data customer base is at 11.7 GB per month.
This is mobile posted business has also witnessed a strong performance on the back of simplified pricing architecture, our strong brand, network, and the trust that customers place on us. In order to cater to this quality customer base, we are continuously realigning our strategy to win decisively in the market and be a truly differentiated player. An average Indian smartphone customer is spending approximately four hours on their smartphones, and devices are moving away from being pure connectivity to lifestyle. Hence, there is a need to offer something more to these customers. Airtel Thanks, our biggest initiative, allows us to be the tether of this digital lifestyle of our consumers. While originally Airtel Thanks was launched in August 2018, it was revamped this quarter to add more value to our customers and provide a differentiated experience using technology, data, and partnership.
We further increased the gamut of our relationships to include innovative offerings such as insurance, online courses from leading global academies, while expanding the scope to include home broadband customers as well. With more than 150 million customers under the program and diverse customer benefits available at each tier, the program affords an ability for customers to move up the value chain, and we are beginning to see some early signs of this upgrading. All of these customer interventions need strong networks, and I'm delighted to add that we continued our quest for network excellence this quarter as well. Talking of some noteworthy developments, we added more than 26,000 mobile broadband-based stations. Alongside network expansion, we also further added capacity across the network through additional sectorization and massive MIMOs. Our 4G adoption of 4G smartphones continues to grow, and a very significant portion of smartphone traffic now runs on 4G.
Combined with ramping up our 4G networks, we completed refarming of our 900 megahertz spectrum to 4G in all the 10 circles where it is liberalized. This has improved indoor coverage for our 4G customers. Airtel became the first operator in India to shut down 3G network layer in Kolkata. This is one of the starting points for us, the learnings from which would be used for shutdown of 3G networks in other circles. This makes the network simpler, besides ensuring better coverage and capacity for 4G customers. With SLAM network deployment, such an upgrade has been realized through software upgrades alone, implying minimal additional investments. To cater to the exponential traffic growth, we further expanded our fiber footprint to more than 280,000 route kilometers, with most of the sites either single hop or two hops from the fiber top.
We continue to work with partners like Google, Facebook, Netflix, and Amazon for deeper and distributed content fashion. This has helped us to serve our customers with significantly lower latency, helping them to have lower buffering, better gaming experience, and faster transactions. Airtel has been the first operator across the globe to commercialize Google EPC, which will further help in hosting content and latency-sensitive applications at the edge, translating into superior customer experience. Our efforts have shown results. As per Rukla, Airtel has the best download speed in 16 out of 20 circles, with latency being lower spin 12 out of 20 networks compared to all other networks in May 2019. Talking briefly about the other businesses, continuing on the positive momentum of last quarter, home business continues to see positive revenue momentum.
Our investments in FTTH plus deployment are now reaping benefits with an expansion in the base and an increase in RPU after 10 consecutive quarters of decline. We continue to be optimistic on the overall market opportunity and focus on the expansion of our fiber business and efforts to offer superior propositions to our customers. The customer base stood at 2.34 million as of the end of 28th June 2019. Digital TV television business continues to grow on the back of strong customer additions and increasing upgrades to premium plans. This quarter, we added 634,000 customers, almost double of our usual run rate. The total base now stands a little over 16 million as of the end of June 19th. Due to the change in reporting mechanisms, as mentioned earlier, the first quarter 20 numbers are not comparable with prior periods.
On an underlying basis, the business saw a 9.3% quarter-on-quarter growth in revenues. Airtel business, after Marjorie's last quarter, has reported revenues of Rupees 32 billion, which is a 6.8% sequential growth. Net revenues grew fast at 7.3% sequentially. The business continues to grow, led by the demand for connectivity and solutions across the spectrum. Overall, trends in the other lines of business remain intact. Moving on quickly to other noteworthy areas and significant events for this quarter. As mentioned previously, Airtel Africa completed its IPO this quarter. The issue received strong response from mainly high-quality investors from around the world. Airtel Africa is now the first telecom company to simultaneously list on the premium segment of the London Stock Exchange and Nigerian Stock Exchange through an IPO.
Following completion of the offer, Airtel Africa is also expecting to be eligible for inclusion in the FTTS UK indices besides the Nigerian indices. Moving on to M&A. Following the TV SATS order directing the US to take the merger on record and approval of the schemes of arrangement by Delhi and Mumbai Bank of NCLT, the scheme of arrangements of the buffer of Airtel with consumer mobile business of Tata has become effective from July 1st, 2019. Consequently, all customers' asset spectrum and agreed liabilities of the businesses stand merged with Airtel effective July 1st, 2019. Airtel and US communications have entered into an agreement to combine their VSAT operations in India. The combined entity will benefit from the enhanced scale, improved operational efficiencies, and wider market reach. Moving on to our consolidated financials.
Consolidated revenues for the quarter stood at 207 billion, up 4.7% on a reported basis and 6.8% on a comparable basis. Growth continues to be broad-based, all segments across India and Africa. Consolidated EBITDA of Rupees 85 billion during the quarter increased by 4.2% compared to Rupees 68 billion in the corresponding quarter last year. EBITDA margins for the quarter was at 41% as compared to 34.5% in the corresponding quarter last year. Adjusting for the NDS 116 impact, EBITDA for the quarter stood at 69 billion, up 1.5% year- over- year, and the consequent EBITDA margin is at 33.7%. Depreciation and amortization expenses were at Rupees 68 billion versus 61 billion in the corresponding quarter last year, up 31.4% year- over- year, mainly due to the impact of NDS 116. It sustained increased spend in enhancing our 4G capacity.
Net finance cost for the quarter was at 32 billion, higher by Rupees 11 billion as compared to the corresponding quarter last year. Increase was largely on account of reporting changes and higher interest on borrowings and derivative and service losses. The resultant loss before tax and exceptional items for the quarter ended 30th June 2019 was Rupees 15 billion as compared to the loss of 3 billion in the corresponding quarter last year. The company recognized net exceptional loss of Rupees 14 billion during the quarter, mainly on account of derivative liabilities pertaining to customary indemnities provided to a cluster of investors of Airtel Africa PLC and expenses relating to its listing, besides charges on account of accelerated depreciation of 3G equipment and certain other items. Net loss post exceptional items came at 28.6 billion.
Capex for the quarter was at Rupees 60 billion as compared to Rupees 82 billion in the corresponding quarter last year. Consolidated net debt of the company stood at 1,166 billion, primarily on account of increase in lease liabilities in line with NDS 116. On a comparable basis, consolidated net debt was Rupees 930 billion. The sequential decline resulted from the repayment of debt from the rights issue proceeds. The proceeds from the Africa IPO were realized in July, and therefore you will see the impact of the net debt reduction from these proceeds in the second quarter of the financial year. The finance lease obligation added on account of adoption of NDS 116 is Rupees 240 billion. To sum up, the telecom industry in India continues to witness a huge expansion in data and voice.
Our non-mobile business continues to expand at a healthy rate, and Africa remains on its proximal growth journey. With our superior investments, quality customer base, strong brand, and innovative product portfolio, we are well poised for future growth. With that, I hand you over to the moderator.
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 console 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 will please press star one of their touch-tone-enabled telephone keypad. On pressing star one, participants will get a chance to present their questions on a first-in-line basis.
To ask a question, participants will please press star one now. The first question comes from Mr. Sachin Salgonkar from Bank of America, Mumbai. Mr. Salgonkar, you may ask your question now.
Hi. Thank you for the opportunity. Congratulations for a good set of numbers. I have two questions. First question and last couple of quarters, we did see a mixed change between your subscribers and RPO, and the subscriber numbers were reducing and the RPO was improving. Now, with this entire low-end subscriber rationalization behind us, the question is, could we see that trend continuing? IRPU continues to catch up, and your subscriber number more or less goes at a relatively slower pace. So that's the first question. Second question, just wanted to understand EBITDA margin improvement levers for cellular business going forward.
Understand there could be a bit of pressure on IC net revenue going down and perhaps a bit from Tata consolidation. But what are some of the positive levers we are seeing actually?
Sachin, hi. This is Gopal. Yes, we did see last quarter, which is quarter four, an erosion of about 45 million customers and a consequent bump up in RPU. That has kind of bottomed out now, so we saw an erosion of about a million and a half customers, a Rupees 4 increase in RPU. I would say that as far as the minimum recharge plans are concerned, whatever had to be done is now done. The intrinsic movement or improvement in RPU will now be a function of upgrading from 2G to 4G and our program on Airtel Thanks, which will drive some upgrading.
Having said that, we are entering into a seasonal quarter, as you know. If you look back over the last few years, you always find quarter two is a seasonal computer in overtime. As far as the EBITDA margin is concerned, the levers continue to be our—I think the biggest lever will be revenue growth, clearly. At the same time, we are driving a strong program on warrant waste, and we'll continue to do whatever it takes on all of the cost items that we can look at to try and see what we can get efficiently out of it.
Okay, Gopal. Would you see clearly when you are close to your bottom run, can we say the same thing about EBITDA that EBITDA is also bottom growth?
I think the incremental revenue that we have generated over this quarter, as well as the last quarter, pretty much flowed through into EBITDA to the extent of, I would say, probably about 60-odd percent. Once you adjust for the one-offs that Basil spoke about, if you recall, we had said that there was a 200-odd crore one-off in the last quarter, which once you adjust for all of that, you'll see a flow through EBITDA. So yes, as the revenue grows, our effort is to try and see how we can keep our costs lower than the growth of revenue.
Got it. And one small follow-up, do we see any risk to checkbanks given the fact that traffic on your network continues to rise steadily?
No, I think this is the way Basil referred in his opening comments to the fact that we are in the process of shutting down our 3G networks. We have experimented quite boldly in Calcutta to really shut off the 3G network altogether, reform the 900 megabytes, which is running on 3G on LT. That worked very well for us. That's given us a lot of confidence. We now have a plan to pretty much shut the 3G networks across the country by December. So you will see a lot of action in this quarter. Don't forget that we have anywhere between 10 and 15 megahertz of 2100-band spectrum in most circles. It's a very, very good mid-band spectrum. And once you're able to get 10 megahertz going, then that feeds through capacity for a period of time.
So our CapEx will continue to look at deployments of new sites wherever it's required in a very smart and clever way. And the second part of the CapEx will continue to be some loading on the 2300-band because the 1800-band is pretty much deployed all across the country.
Got it. Thank you, Gopal.
Thank you very much, Mr. Salgonkar. The next question comes from Mr. Haragupta, Morgan Stanley, Mumbai. Mr. Gupta, you may ask your question now.
Yeah, hi. Thanks. So Gopal, I just have two questions. Firstly, when I look at the 4G subscriber base across the country, I guess the focus of EBITDA obviously is to drive that part of the bucket.
Just wanted to understand, based on your own 4G subscriber base, wanted to get some understanding of how the trends are out there, primarily with respect to RPU subscribers using Apple as a primary SIM, bulk of the time for data usage. And how do you see that trending? Do you see people increasing data usage over a period of time from another network to yours, or do you see that a relatively consistent trend? Just trying to understand your SIM versus your competitor's SIM. And the second question I had was on Airtel Thanks, all these apps that you're now providing and including the music app of Wink, could you give us some sense of what kind of usage patterns are you seeing out there? Are you seeing higher engagement times? What's the daily active user base?
And how do you see that trending, which is giving you some confidence that this could lead to RPU upgradation over a period of time? Thank you.
So on the 4G base, we have about 95 million customers, which is what we reported in quarter one. That's growth of about 9 million customers. When we report to this customer base, by and large, most of these customers have the 4G slot on the primary SIM. Because one of the things that you find on devices in India is that most devices have a data bearer only on the first SIM slot. So if you're on the second SIM slot, you can fundamentally use only voice. Now, when a customer buys a bundle of, let's say, 160 or 170 rupees with lots of data, chances are that he will put it on the primary slot, and that's exactly what we're seeing.
So to the second question, which is on the shift between us and competition, that's difficult to say. I think our focus is to see what can we do to grow market share. We've had, I would say, probably four quarters of kind of steady market share. This quarter, our expectation is that we would pick up some market share, which will be satisfactory from our perspective given the competitive context. On Airtel Thanks, Wink Music has done exceedingly well in this quarter. We launched the feature of actually setting for ringtone through the music app, which has actually gone very well. And that is, in a way, creating a lot of stickiness for our service. I can give you a quick sense of our monthly active users. We have reached the 30 million mark.
If you take a slightly, maybe a definition of 90k users, then that gets to a much higher number. But the monthly active user is about 30 million mark. Airtel TV is again similar. And between these two apps, we have a base of almost 50 million customers engaged on a monthly basis. We've set up a platform at the back. I think I referred to it some time ago called Customer 360, which is really looking at the intelligence by plotting the usage and the understanding of this customer all through this platform of Customer 360, which is helping us to drive greater engagement and greater stickiness.
And Gopal, with what you're providing in Airtel Thanks today, do you think that we can keep getting richer at the same price point, or do you think this is good enough for the prices that are currently being offered?
I think our effort is always to raise RPU. We do believe that the pricing today, and we made this clear over many, many quarters now, that the pricing levels in India are unsustainably low. You get for 45 gigs of data, unlimited calling for about 150 rupees, which is clearly very, very low. That needs to rise, but that is a function of the competitive dynamic in the market. So yes, we will keep adding value, but we will try and cure this up so that we throw in more value as people upgrade. As we are doing this, we're also getting increasing confidence that we could also use Airtel Thanks in a way to drive other streams of revenue, such as carrier billing and perhaps some early signs of early ways to monetize this through advertising. But that is something that we are assessing right now.
As of now, our effort would be to try and upgrade.
Got it. Thank you.
Thank you very much, Mr. Gopal. The next question comes from Mr. G. Vigiri from IIS Capital, Mumbai. Mr. Vigiri, you may ask your question now.
Hi. This is a question on the derivative loss. You have some agreements with the pre-IPO investors in Africa. I just wanted to know how long does this go? Then is there a limit on the total exposure on this? And since you've paid in cash terms also, is the protection correspondingly reduced? And is it dependent on the stock price? And since in July, the Airtel Africa stock has fallen a little bit more from the June closing level, will there be another hit in TQ? Those are my questions.
G. Vigiri, I'll answer this question. This is Nakul.
Just to give you a brief from what Basil had actually alluded to. So just to give you a background, a clutch of investors in Airtel Africa and a subsidiary of Bharti Airtel actually had entered into an agreement for investor protection. This protection is inter-alia, pursuant to customary indemnities and warranties, which is pertaining to their investment in equity shares of Airtel Africa. The arrangement to settle that you see in this quarter was part of the process to facilitate Airtel Africa's admission to the premium listing of the London Stock Exchange. And in this quarter, as you rightly pointed out, the expected charge that you see is pursuant to these derivative liabilities along with other listing expenses, which has been transparently recorded as an exceptional item in this quarter.
These liabilities, you will note, are quite customary in nature because such protections are given to investors to give them comfort. And which can only be crystallized as and when the event occurs, which in this case is obviously the IPO. And since the IPO has happened, some of it has been crystallized, and a large part of it has already been paid out. Some of the key items that you see is, of course, continuing to tax demand, which includes Tanzania litigation that you would have heard about, the IPO obligations, and some minority investments which have now been crystallized and resolved by way of an arrangement is already recorded in the books. I hope that answers your question.
So my question is, I think in June end, the stock closed at 80 cents, and now it's 69 cents as of today.
So is that movement going to trigger another payout? That was the main question.
So the amount that we've recorded is actually based on a derivative liability or a derivative financial instrument, which is based on a balance sheet date of 30th of June. And that's the best estimate of the liability that we've recorded for now.
Yeah, but if this stock moves down, is there going to be more payout in the future? So how should we even forecast this, or is there a limit beyond which there won't be a payout?
Quite honestly, these derivative instruments run on complex pricing models. And if we use a complex pricing model to determine the amount of liability that we should record, and based on which a payout has already happened as of date.
Yeah, but my question is on the future payout.
I'm not really asking you for an estimate of the amount. I just want to know if the stock falls, will there be more payouts?
Honestly, it's very hard to speculate and give you an amount of what is going to be the future payout. But what we've recorded is what has transparently been discl
osed. Sure. Sure. Thanks.
Thank you very much, Mr. Vigiri. The next question comes from Mr. Ravi Menon. From Elara Securities, Mumbai. Mr. Menon, you may ask your question now.
Hi. Thank you for the opportunity. And congrats on a good setup, of course. The question is, how many of the 140 million customers or so who have bought by Airtel have been incentivized to at least one of the offers of the program? And what's the second question? The second is, how long do you think it'll take to completely shut down 3G?
So you said December, you dropped most of the company. And what would be the likelihood of sales from that? How much of the lease applications should we say relates to 3G?
On Airtel Thanks, we don't quite report how many customers have taken anyone's service. But I would say that we have all these customers on Airtel Thanks. Some of them are not digitally most of the benefits on Airtel—sorry, let me just pull back. All the benefits on Airtel Thanks are delivered through a digital layer. So to that extent, it's not that 100% of them have taken it. But a very large proportion have taken it. And many of them have taken actually two services. On the 3G question, we are—like I said, I think this quarter we shut down Calcutta. By September, I think there'll be another six or seven circles that will get shut down.
And between December and March, pretty much the entire 3G network should be shut down.
And how much cost savings can you expect from 3G shutdown?
How much what?
Cost savings. Cost savings. Cost savings.
So Ravi, the cost savings won't be enough because most of the places we have already migrated to SWAN. So we'll be using the same equipment to deliver 4G. So there will be significant cost savings from a network perspective, except for the AMC and other benefits. AMC is a managed services area that we have today. All right.
Great. Thanks. So I guess there'll be really no changes on these obligations as well. Right.
No, these obligations will not have any changes. There will be an additional impact on managed services and AMC, but they will be not large.
Great. Thanks. And one last question for Ravi.
You seem to have gotten far better compared to what I have idea in terms of how we retain your 2G subscriber base from through this churn. What do you think you would attribute that to? Is it because you think you have now more population coverage compared to them or better quality network? What would you say is the main reason? I can't speculate on what comparing ourselves to our competition. I think what we would see is that the fact is that we've still lost 1.5 million customers. And our effort will be how do we sort of make sure that we don't lose customers. Secondly, I think the second thing that our obsession is to see how do we get really active customers. Our VLR percentages are close to 99.6.
So our active customers are very, very strong, which means anybody who's engaged in our network is actually giving us revenue. And that's important for us. And the third part, which is really our focus, whether it's 2G or 4G, is really how do we upgrade our customers. We're happy to lose customers who don't pay us money, which is why we did the minimum RPU plans. And from here onwards, really how do we upgrade these customers and drive greater RPU? I think that's really the focus. And the entire system is really geared towards looking at about 670 districts at the district level. We've identified around 244 districts that are really the most critical districts for us where the bulk of the industry is. Those are districts where we put a significant amount of resource at the right investment. The metrics are tracked at that level.
So those are the parts of our execution which I think we take very seriously as well. Thank you for the detailed answer and perspective.
Thank you very much, Mr. Menon. The next question comes from Mr. Rajiv Sharma from SBI Cap Securities, Mumbai. Mr. Sharma, you may ask your question now.
Yeah. Thank you so much for the opportunity. Just a couple of questions from my side. So firstly, Gopal, we still continue to lose subscribers. Is it all related to the low-end subs, which could be related to Jio Phone or Returning because they are not paying us? Or there is some movement in the high-end as well? Secondly, Jio is not offering any kind of postpaid, or they don't seem to be very serious about postpaid today. Vodafone and Idea are struggling.
Do you think next two to three quarters, with your Airtel Thanks, with your investments in network, we could see some spike in your postpaid additions and RPU improvement following that? Lastly, just want to understand how many services, like you said, two services people have taken in this Airtel Thanks. How many services one will have to take for your RPUs to improve? And currently, how much of this Airtel Thanks subscribers have resulted in RPU improvement? Because I'm also trying to understand, there are a lot of these wallets like Paytm and PhonePe, which are giving a lot of cashback and similar discounts. So how do you differentiate among them? Thank you.
So I think just to step back, when we did the minimum RPU plans, before we did that, I think we had 320 million customers, or was it 3? 32. 32 million customers.
And our estimate was that we would have probably lost, which is what we had kind of indicated at that time, about 65 to 70 million customers. So to that extent, I think we have been pleasantly surprised that we have not lost as many, and we have kind of held it now at about 281. From here on, our effort will be to try and see how do we not lose any customers and continue to see some growth. But it's going to be modest growth given what's happening in the marketplace. Postpaid, you're right, is an opportunity. And we have re-architected the pricing on postpaid. Historically, going back in time over the last decade, the acquisition pricing was always lower than pricing for existing customers, which led to an arbitrage.
And given the significant premium that postpaid has over prepaid, we have re-architected pricing to fit in line with existing customers, which has led to no further downgrades. And this is the reason that you're seeing an RPU upside. Secondly, the acquisition continues to remain as it was and is also giving us an RPU upside on the acquisition. Our third focus on postpaid is to see how do we actually give a better service and better experience. A lot of focus on the network to try and make sure the network quality is better, making sure that we are sort of wiring up and getting the big resident welfare associations, the big tech parks. We've identified 10- 12,000 buildings, over 4,000- 5,000 tech parks across the country.
Or when I say tech parks, it's office complexes, which are all really focused on to actually give a better network experience. And finally, we're looking at how do we segment on our postpaid offer to deliver better value, whether it's in content, whether it's in terms of experience, no waiting at the conference, no waiting at the store, and so on and so forth. So those are the reasons that we think that the postpaid business is holding up. We're not happy with where postpaid is. It should be much bigger. In fact, if you compare a market like Brazil, for example, you find postpaid is about 60 to 65 percent of revenues. Philippines, which is not much richer than India, is about 40 to 45 percent. So India should be much bigger than postpaid.
And the only reason this has not yet happened is because prepaid is so underpriced when compared to postpaid. I think that was. How many services does it take to fill out to a 50-minute? No, I don't think we look at it as how many services we have to take. I think that if you look at, for example, just to give you an example, if you look at the Gold Tier, where you have to spend about 200 rupees or more, then what you get access to is a lot of exclusive content through our partnership with Z5. We also give you exclusive content on English through our partnership with Hook, and so on. So that in itself is a reason to upgrade. We're also trying to look at what can we do to find more hooks to upgrade.
Airtel Thanks will see a very big refresh in the next three to four months as we put those hooks in place. I don't want to talk a little bit about it because it's premature, but we're putting some very strong hooks to try and get upgrades going in the next three to four months.
And as we talked about Paytm, PhonePe, so how do you differentiate with them apart from your content bundling?
I don't think we are looking to differentiate with them. As far as we are concerned, we see them as a channel. They also distribute our e-charges. They are just a wallet. In the case of Paytm, it's a wallet. Or in the case of PhonePe, it's just a kind of a UPI platform, which the app sits on top of the UPI platform as an underlying bank account.
So we don't see that as a competition. Think of it as a storefront. You go to a retail shop and actually recharge. You recharge on PhonePe. You might recharge on Flipkart. You might recharge on Amazon or on Paytm. These are kind of storefronts as we see. And some of them are wallets, but they're kind of masquerading as storefronts, which is fine. For us, we want to partner with everybody to make sure that we are getting recharges and payments through all of those. We're also focused on driving recharges and payments through our own properties, which is our own website as well as our own app, Airtel Thanks. And that is also growing smartly.
By the way, when we get incremental business coming from these online platforms, you do see a reduction in cost because there is a lower channel commission online than happens offline because it's a tiered distribution infrastructure with a distributor and a retailer and so on. So it would be fair to say that every quarter, three to four rupees of RPU at least could improve for the next three to four quarters? Well, I can't give you a guidance on that. So what I can tell you is that we've entered into a seasonal quarter.
Thank you very much.
Thank you very much, Mr. Sharma. The next question comes from Mr. Kunal Vora from BMT Paribus, Mumbai. Mr. Vora, you may ask your question now.
Yeah. Thanks for the opportunity. First one is you mentioned seasonal quarter. The large portion of revenue now coming from customers on budget plans.
Should we still expect the seasonal weakness in the second quarter, or it's generally general consumers spending slow down? Second is, can you share?
Sorry, you cut you. Yeah. It's a good question that you asked because, I mean, that is the same question that we've been asking ourselves. But we still have a very large number of customers who are outside of budget plans. So therefore—and also, I think what happens is that when we look at the purchase pattern, it's not necessary that every customer buys a bundle every month. We have a metric which we track internally to look at the continuity of the bundle purchases on a monthly basis. And that number is certainly not 100%. It's lower by at least 10%- 15% . And therefore, the question is, what do customers do? And I think they kind of balance their budget.
So sometimes they'll buy a bundle. Sometimes they might buy a metric plan. So that kind of thing happens. And that is something that we see.
Sure. So you are indicating that the growth has slowed down compared to the last quarter, or you are indicating that the second we should be expecting what you see in this quarter?
I'm not indicating anything else. I'm just telling you that we went through a seasonal quarter.
Okay. Second question, can you share your longer-term plans for the digital TV business? Can we see further consolidation in the industry and whether you're willing to commit more capital to the business?
The business is well-funding. We're committing as much capital as our business needs. It's a good, neat little business which is growing very well.
And after the recent changes in the regulatory framework, I think we've been able to pick up almost 630,000 customers net addition in last quarter, which is a very, very big increase, a lot of it coming from the cable side. So we're pleased with how that business has progressed. One of the things we are looking at is to bring in a box which will kind of offer a full-converged entertainment as well as the capacity to deliver broadband. This will happen soon. And we are very excited that once we do that, then it's a full-converged way that we can potentially deliver across multiple schools. There have been some concerns about cord cutting in the urban areas and metros. We haven't seen any evidence of that yet. What I wanted to check really was actually on the.
On any plans for acquisition, would you be willing to be a consolidator in the market? There have been talks that Dish TV is looking at Airtel Dish TV, so I just wanted to check on that. Yeah. I think those are the newspaper reports, so that is something that we can't comment on. And lastly, just the status of litigations. There are a lot of litigations on the content of Interconnect with Jio and license fees and extra structural charges. What's the status? When do you see resolutions and whether you see any risk of clearance? The case is in court. The hearings have been concluded. The order now is resolved. So as soon as the orders come, we'll know. We're talking about the AGR case.
Okay. Thank you. Thank you. Thank you. Thank you so much. Thank you.
Thank you very much, Mr. Vora.
The next question comes from Mr. Sanjit 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 on your enterprise—sorry, on the capex front. What sort of a capex we should expect at Kartika, and particularly in India Mobile? Is it a 50 million with Android, or do we see a pickup ahead in the third and fourth quarters? That is the first question. And the second question, Kunal, question on the—obviously, a lot of price hike happening in the future, which will happen. But the constructive price hike over the long term from an industry point of view, customers are already using non-one-and-a-half GB for 1.22 GB per month. So my question is, how difficult do you think it's going to be to get subscribers to shift to, let's say, more higher amounts?
Or do you think we'll also have to do basically cut down, basically get them on a less for the same kind of platform? Will you have to cut the data allowance at one compared to the price point to get some of those guys to move up? So just your thoughts on the constructive price hike of Jio over the long term?
On the capex front, we have stopped giving guidance, as we mentioned in the beginning of the quarter. But we also did indicate that this is going to be a lower capex year than last year. Typically, we see a higher upfront capex. The first half of the year tends to be higher than the second half. But by and large, the capex will be moderated compared to last year. So that's the first point.
On the second point, I think let me ask—I'll answer the question in theory and probably then in practice. In theory, in a market like India, which is so stratified and where people—there are the rich, the middle, as well as the poor. And I'm probably oversimplifying. There are people who can easily pay you 1,000 rupees for mobile telephony. And at the same time, there are people who probably can't pay you more than 50- 70 rupees for mobile telephony. So the problem with pricing at 120 for everything is that the one who's at 1,000 will crash down there. And so somebody who's at 50 is not necessarily going to go up to 120.
So I think that from a theoretical perspective, the architecture on pricing must be such that it invites upgrading, which is your point about what you call it, which is less for more or more for more, whatever phrase that you use. So that's the way that in theory should work. Having said that, we are where we are. We are at a situation where for 130 rupees, you get everything. And here, I would imagine that elasticity, given the amount of data that's getting consumed on the network, 11.9 GB, as Balun mentioned, people spending four hours a day on the mobile device. Lifting this by 20, 30, 40 rupees is something that can easily be done. That said, like I said, this is a competitive situation. We're not expecting any pricing to move up.
We're prepared for it to not move up, even though it's unsustainable at this stage. So you're pointing to the difficulty of raising pricing in this market so much?
No, I'm not. I think it's difficult to raise. I think it will go through very easily. The question is, will it? And if so, when? That's the only question.
Okay. If I could just squeeze in one little question on the depreciation expense, which seems to have gone up quite a lot. And I'm just looking at the depreciation without the one-month impact. We've seen a 500 crore, 5 billion increase. So what exactly is driving that discount? We haven't seen this kind of increase ever. Sanjit, the increase is primarily driven by the investments which we have made. We have an average capex of close to 4,500 crores every quarter.
And it's a close to our depreciation on account of that. There's no accidental depreciation or anything which is significant here? No. No accidental depreciation. As I pointed out earlier, Sanjit is reflected in the exceptional items.
Okay. All right. Thank you for that and all the best.
Thank you very much, Mr. Chawla. The next question comes from Mr. Pranav Shatria from Enterprise, Mumbai. Mr. Shatria, you may ask your question now.
Hi. Thanks for the opportunity. I have just two very small questions. Firstly, regarding this exceptional item of 15 billion. So can you please tell us what is the underlying asset of these derivatives for which these expenses have been done? Second question is, can you throw some color on fiber monetization, where we are, and how do you see it panning out?
Thank you. I'll take the first part of your question, Sanjit.
I think we discussed it in a good amount of detail, but just to explain it a little bit more. So there are a few items when you look at the exceptional and the indemnities in which I mentioned earlier. It's a tax amount which includes Tanzania, some minority adjustments, IP obligations, and so on and so forth. And whatever was an estimate, I mean, most of them have been resolved by way of an arrangement. And an amount for which has been determined and already accounted for in the books, and most of it has been paid as well. This is what I can mention about this. Nothing further than this.
Yeah. And if you have any follow-up, we can take it subsequently.
Pranav, as mentioned in our earlier call, we have moved all our fiber assets to a 100% subsidiary.
And we have all approvals in place right now, and that's going to be effected in this current quarter. Regarding monetization, we'll continue to evaluate approach motifs. And at the right time, we may choose to see what would be the potential structure at that particular point in time. We continue to evaluate approach motifs which comes in front of us.
Okay. Thank you. That's a triple share.
Thank you very much, Mr. Shatria. The last question comes from Mr. Vivekanand Subramaniam from Ambit Capital, Mumbai. Mr. Subramaniam, you may ask your question now.
Yeah. Hi. Thank you for the opportunity. I have two questions. One is, you mentioned that you are shifting your 3G spectrum and relocating it to 4G. Is it possible for you to share the portion of spectrum that is allocated across technologies? A ballpark number is also good.
And how has this changed over the last year, and where do you see this going, let's say, by March 20? Second question is with respect to the voice customers to data or voice customers' migration to data, the ARPU uplift. Last time, you had indicated that it was around 2X ARPU uplift. Is that the trend that you see even in the current quarter, or is it any different? Thank you.
I think for the second question, yes, we do see an upgrade when somebody moves from 2G to 4G. And the increase is along the lines of what you indicated. We haven't seen any change in that. The second part is on the 3G spectrum—I'm sorry, on the overall spectrum. I would suggest the way you should look at it is look forward, let's say, probably April 2020. We will really have only 2G and 4G.
So all our spectrum will sit on 4G, other than the administered spectrum, which is on 2G, and that can be really worked out based on the spectrum holding that we have. Plus, a small slug of spectrum that we require to run our 2G networks, which will be anywhere between 5 and 7- 8 megahertz. Everything else will really be sitting on the 4G band. All right. So Gopal, the small slug, 5 and 7- 8 megahertz, that's in the 1,800 megahertz band, right? It's mostly the 1,800 band. In some circles, it's also in the 900 band, where we have enough 900 bands. All right.
Understood. Thank you.
Thank you very much, Mr. Subramaniam. At this moment, I would like to hand over the call proceedings to Mr. Badal Bagri for the final remarks.
Thank you all for joining, and look forward to talking to all of you in the coming quarter.
Ladies and gentlemen, this concludes the conference call. You may now disconnect your lines. Thank you for connecting to Audio Conference Service from Airtel. Have a pleasant evening.