Q4 20/21

May 17, 2021

Good afternoon and thank you for joining us on this webinar to discuss Bharti Airtel's 4th quarter and full year FY 'twenty one results. Before I hand over to Gopal, I wanted to quickly highlight that we will be conducting a Q and A session for the participants on this call. Participants who wish to ask a question can send in the question using the moderator chat option on their BlueJeans interview. With this over to you Gopal for your opening remarks. Thank you, Gopal. Good afternoon, ladies and gentlemen. Thank you for joining us today for this webinar to discuss our results for the Q4 ended 31st March 2021, which we announced yesterday. Present with me are Badal, Harjeet and Pomal. As you know, we're passing through a devastating second wave of COVID. Our communities and the customers we serve have all been profoundly affected. Within the company too over the last 45 days, We have seen almost 12% of our people go down with COVID. That is almost 5 times more than we saw in the previous peak of September 2020. Sadly, we've also lost 13 of our colleagues. Yet in spite of the difficult circumstances, Our teams have demonstrated commitment to Airtel's overarching purpose of serving our customers and the country. Nothing makes me prouder than to be leading this amazing team. Every day I come across inspiring stories. Let me just share 3 of them. In Mumbai, when every other service provider refused to install a broadband connection in the form of COVID positive customer, the team of Manoj and Sanjay from IIT Delhi, Dawn, their PPE kits followed the strictest of safety protocols and did it. Zafra as a store executive in Lucknow didn't just home deliver a scent but also organized urgently required medicines the customer's pregnant daughter since the family could not step out. Our Manoj from Mumbai's fault management team ensured that to ensure that no customers were inconvenienced, worked on a war footing to repair a site inside a residential society, Even though it was a containment zone. Each of these employees were committed to our purpose. For us, it's a matter of pride that we provide an essential service. In fact, our service is the oxygen for the digital platforms that are enabling customers to work, study, consult doctors, help others in the end of day. Now on to our performance. In the Q4, we delivered yet another quarter of strong performance. Our consolidated revenues grew sequentially by 2%, while the underlying India business grew by 3.4%. Our consolidated EBITDA margins for the quarter were at 48.9% compared to the preceding quarter of 45.9%. This consistency in performance can be seen across the board in almost every part of our portfolio. As a result, we've grown market share, revenue market share in each of our businesses. Our business is driven by a simple strategy, a relentless obsession with customer experience and a sharp focus on quality customers. There are 4 additional enablers to these choices. The first is digitizing the core to improve experience and eliminate waste. 2nd, modularizing these capabilities to drive new revenue streams through products and partnerships. 3rd, bringing together the power of Airtel through a unified customer view and integrated channel approach. And 4th, doing all of this with financial discipline while waging a war on waste. This strategy is a thread that ties all our businesses together and creates alignment and cohesion across the team. Let me now comment on each of our businesses in the portfolio. Let me start with Airtel business. Here we continue to gain market share, not just annually, quarter on quarter. In fact, as for Frost and Sullivan, from a 23% revenue market share in December 2018, We are now at 31% share in December 2020. This represents an 8% share gain in 2 years. We've now closed the year with an annual revenue run rate of $2,000,000,000 The fact, however, is that only 20% of our customers Contribute to 80% of the business. So there is a massive opportunity to go wide in order to grow share to tap into the 80%. There's also a big opportunity to go deep with the 20% to gain a higher share of wallet. So wide through hunting and deep through farming. To tap into this opportunity, we are retooling our channels as well as our product portfolio. Yeah, we're doing 4 things. 1st, we are in sourcing our entire SME sales force, which was earlier outsourced. This will lead to upgradation of our SME channel capabilities, helping us gain share. 2nd, we are building our omnichannel digital capabilities. Today more than 95% of the new orders for the product lines where we have begun this effort are coming through digital channels. This will also help us expand reach and gain share in the SME segment. 3rd, we've entered adjacent areas So we can go deeper with our customers to far more effectively. These new areas include data centers, Airtel Secure, Airtel IQ and Airtel Cloud. I've spoken about these earlier. All of these are building traction and are helping us grow share of wallet. This quarter we also launched Airtel IoT. Airtel IoT is an integrated and end to end platform with the capability to connect and manage billions of devices and applications in a highly secure and seamless fashion on Airtel's 5 gs ready network. Finally, our teams have now been given differential and separate targets and incentives for both hunting and farming. This will allow us to meet our twin objectives of growth and share and growth and share of all. Now to our homes business. The broadband business has grown to 3,000,000 plus customers on the back of strong demand for home broadband. During the quarter, we expanded our footprint new towns and cities to our unique LCO partnership model, adding 1,000,000 plus home passes there. We're now present in 200 plus cities. As a result, our net adds this quarter at 274,000 have been the highest ever. In our DTH business, we've now become a clear number 2 in the market. From a revenue market share of about 22% in December 9, 2018, We believe we are at a 27% share in December 2020. We have in fact outpaced all other players in terms of performance this consistently over the last 8 quarters. With full ownership of the DTH entity, we have even more flexibility to drive this business. As a result, we have now combined our large mobility distribution system with DTH to create 1 mass retail channel, which will drive all businesses, mobility, DTH and the payments back. This should give a fillip to our DTH business. Second thing we've done is to have a dedicated channel for high value homes. We believe there are 50,000,000 high value homes in India And we already have relationships with over 30,000,000 of them through at least one of our services, postpaid DTH or broadband, bringing the full power of Airtel to the home by combining all our services together for the customer with an opportunity waiting to be tapped into. As part of this, we now take one view of the customer and have one integrated channel strategy. As a result, we have combined our 2,000 retail stores along with our broadband sales organization to create one integrated direct to customer channel. This channel now delivers and installs all Airtel services in the home. The unit around which this whole channel revolves is our store, the owner of the Micro Catchment as we call. Let me now turn to mobile. During the quarter, we acquired precious spectrum. We now have a pan India footprint of subligard spectrum that will help us cover an additional 90,000,000 customers as we turn on the spectrum in India. We've also substantially strengthened our mid band spectrum banks across 18,021,021,000,003 This will help us to continue delivering the best network in India as far as customer experience is concerned. In fact, I'm pleased to say that within the country, we have 33% of liberalized spectrum, 30 3% share of liberalized spectrum, the strongest holdings in India. Much of the spectrum can also be seamlessly refarmed to 5 gs over time. We've also accelerated our coverage footprint in the quarter by adding 8,300 sites, which put a little bit of pressure in terms of network OpEx. We've also substantially strengthened our transport network as we ready ourselves for a 5 gs rollout. Based on our estimates for quarter 4, we believe we've gained market share and entered a new lifetime. This performance is on the back of strong 4 gs net adds of 13,700,000. In fact, over the last year, we've added 43,000,000 4 gs customers to network And 1,900,000 net adds for the postpaid segment. It's all been driven by our focus on experience. In addition, we're raising our execution bar by sweating our assets on the ground. We do this through a combination of smart deployment based on data science and go to market efforts that consider our unit of performance at an individual site level. During the quarter, the reported revenue in ARPU was impacted by a combination of the move to the pill and keep regime as well as fewer days. For ease of comparison, we've reported all numbers on a comparable basis to reflect the underlying trends in the business. Based on this, our mobile revenue grew sequentially by 4.2% and ARPU moved from INR146 INR148 on an equated day basis. While this ARPU is the highest in the country, It also shows the massive headroom for ARPUCO. I say this for two reasons. 1 is the very low level of tariffs in India, which we all know about. The second is the fact that we have 140,000,000 users on our network who are not on 4 gs and whose ARPU is less than half of that of the average of the business. Now to our digital platforms. We've reached a significant milestone at 200,000,000 monthly active users. Wink has 72,500,000, Airtel Extreme is 37,500,000 and Airtel's tanks is at 96,300,000. As I've said before, we have a 3 pronged digital flywheel. First, it allows us to get more efficient and deliver a better omnichannel experience on the core business. 2nd, allows us to build new revenue streams on our core foundational strengths of data payments, distribution and network. And finally, it allows us to create an ecosystem of partnerships that leverage these strengths. A quick word on 2 of our digital businesses. PayTel Payments Bank is now rapidly gaining scale. We already have 54,000,000 active users and a monthly throughput of around INR 22,000 crores. Our distribution footprint is across 290,000 outlets. There is great synergy between the bank and Airtel. After all customers who have an Airtel payments bank account with us see a lower degree of churn. On a standalone basis, we are on the road to profitability and we expect to achieve that in the next year in the coming year. During the quarter, we also launched a first of its kind innovation Airtel SafePay, and differentiate our bank even further. Airtel Safe Pay leverages Airtel core telco strengths To provide the highest level of protection to payments bank users from potential online frauds, we've also announced an attractive 6% interest rates on savings account deposits over INR 1 lakh. This quarter, we also launched Airtel Ads. Airtel Ads is a brand engagement solution that our brands of all sizes to curate consent based and privacy safe campaigns, one of the biggest pools of quality customers in India. This is a massive and growing market. In the beta phase itself, we have worked with over 100 bands and are beginning to clock meaningful revenues. Finally, I want to touch on 3 additional pieces of information. First is on our balance sheet. We are now in a more improved zone to an optimal capital structure and well timed fundraisers. We raised almost $12,000,000,000 in the last year or so and have also recently refinanced high cost debt at attractive rates. Despite the AGR liability, leverage at 2.95 is comfortable versus global peers. In fact, if you break the average overall debt, DoD and AGR debt itself account for 56%. In addition, accounting leases contribute to 19% of the debt. It's also nothing to see that our investments in Bangladesh and Africa are now becoming attractive. Our new corporate structure we believe will also help us sharpen our focus in driving our different businesses, India, international, infrastructure and digital. 2nd, we have successfully monetized some of our assets, including Airtel money and tower assets in Africa. In addition, we've also monetized the unutilized 800 megahertz spectrum in 3 circles in India by entering into a trading arrangement with Alliance. 3rd, let me provide some updates on our ESG initiatives. On an environmental impact, we are aligned with the Paris Climate Accord. We have proactively implemented clean fuel based power solutions for our towers, our data centers, our switching centers and other facilities. We commissioned a 14 megawatt captive solar plant shortly after the quarter ended to meet the energy requirements of our core and edge data centers in Uttar Pradesh. Another similar plant is expected to be commissioned in the coming months. On the back of all of these initiatives, we aim to meet more than half of our FY 'twenty two power input to renewable energy sources. In fact, over the last few years, we've reduced our carbon emission per terabyte by 78% against the self imposed target of 80%. Sustainability is a mission critical priority for us, especially since we're in the business of delivering an essential service. Every day over this period of this pandemic, along with the Airtel management board, I personally take stock of the health of each of our employees who've been impacted. There are several things we've done in the last few months to confront the challenges of the pandemic. We have stepped up both life insurance and medical reimbursement for our frontline employees. We now have 26 doctors on our in house panel to allow employees and their families access to medical advice. We provide access to oxygen concentrators and access to hospital beds where possible to our COVID care team. There are stress and mental health counselors That helped relieve people of challenges as they face a new norm. Almost all our support staff work from home. We're also rolling out an extensive vaccination program For all employees and associates, partner employees in partnership with Apollo Hospitals. Here our priority will be to first vaccinate our frontline teams, network engineers, installation and port repair staff, store executives who are out there helping us serve customers in these difficult times. Finally, we continue to raise our standards of transparency in reporting and governance. Let me give you a few examples. We always restate our numbers in the event of any major changes whether regulatory or otherwise. We do the same when we take any exceptional provisions. This quarter for instance, we've restated our numbers and in particular our R2 given the abolishing of the IOC regime. To make the ARPU definition even more stringent, we have eliminated the interconnect revenue as also the inter license settlements between circles that were related to the historic interconnect regime. What it therefore means is the ARPU is now a true measure of customer revenues of the mobile business only. Equally, we've given you a like for like comparison with previous periods, allowing you to assess our intrinsic performance. Second example of our standards of transparency is our customer definition. They have a very stringent definition of customers that we've used within the company. One of the definitions is active customers, also known as VLR customers. This refers to any customer We'll simply latch on to the network regardless of whether she gives any revenue. The active customers for us in March 2021 Suresh,344,400,000. The second definition is revenue earning customers. These are customers who actually delivered some revenue to us the rolling 30 day period. This number was $321,400,000 The active number of $344,000,000 will always be slightly higher the revenue earning number of $321,000,000 for obvious reasons. This is due to what I mentioned already. The active number also includes those customers where we latched on to the network, but have not recharged. So they don't give revenue. Such customers include those who are perhaps not recharged at the end of their validity period. They also include international in roaming customers Who may be latched on, but don't necessarily give us revenue in the preceding 30 days. These definitions we believe are stringent, They're directly linked to revenue and they allow you to make a transparent assessment of our performance. 3rd, if you look at our accounting for depreciation or spectrum amortization, We do it on the basis of globally accepted practices that every top notch telecom company follows. We're also love to hear your inputs on our transparency standards So that we can continue to raise the bar always. Finally, a word on our Board. We have an exceptionally qualified Board with a diverse skill set It includes expertise across public policy, finance, risk, private equity, technology and telecom. There are 3 women directors on our board There is a clear separation of responsibilities between a promoter chairman and a professional and empowered managing director backed by a highly professional and diverse management team. In sum, this quarter has demonstrated our strong execution across the portfolio. Our digital capabilities are now formidable. Our experience continues to be the best in the industry and our brand remains the most aspirational brand in India. With this, we open up for Q and A. Thank you, Gopal. The first question comes from Kunal Hoda of BNP Paribas. In Fatih's two questions. I'll take them 1 by 1. The first one is that Airtel has added almost 16,000 towers in second half of FY 2021, which is the highest addition in a 6 month period. Airtel has also enhanced its spectrum holdings. With these investments, we'll be able to lower our CapEx in FY22. And if you could also share your thoughts on CapEx in the medium term. I'll ask the second question maybe after you answer this one. Yeah. I think thank you for this question. We still have if I look at the overall CapEx profile I've mentioned that our peak CapEx was hit sometime in FY 2018. Since then, we have kind of been hovering around the Same number and we believe that FY 2022 will see CapEx around the same level as this year. The Composition of the CapEx is how we're beginning to change. There is more and more money being spent on transport. There is larger amounts of capital allocation that we're doing towards our broadband business, towards our enterprise business, which includes our data center business, NexCap. There's a rollout of sub gigahertz spectrum that we will need to deploy across and that's the radio CapEx. And then of course, there's transport CapEx. Now why is it all of this important? The transport CapEx is important in the run up of 5 gs. Non wireless portfolio is important and it's going to get more and more meaningful over time And needs to be funded well. The 4 gs radio CapEx I think will begin to moderate. Having said that, this year we need a rollout of subligard spectrum, which is linked to 4 gs radios as well as additional deployments to fill our entire coverage across the country, particularly in deep portal areas. Thanks, Gopal. The next question from Kunal is that his checks seem to indicate that competition to acquire customers has increased in the market, specifically with operators offering attractive incentives for M and P. So he wants to know if there's been any increase in competitive intensity in the marketplace as far as 4Q is concerned. Yeah, definitely. I would agree with that. I think we did see an increase in competitive It's intensity, particularly when it came to things like sales incentives and channel commissions in the quest to attract more customers. This is actually not a great and healthy development because what happens is a lot of customers do tend to buy a SIM and throw it. But having said that, I think our effort continues to be really razor sharp in terms of customers to acquire and where to acquire them. Of course, with the onset of the pandemic in April, we saw a moderation in that competitive intensity because many of the states are now seeing varying stages of lockdown. So in the quarter for Q4 we did see some increase in competitive intensity not on tariff, with more on acquisition and channel functions. Thanks, Gopal. The next question is from Vivekananda Subramaniam from Philip Papadhy. He also has 2 questions. The first question is, what is the reason for 1.4% Q on Q ARPU growth adjusted for the number of days versus the 2.5% to 2.7% growth that we've seen in the previous quarter? And didn't the 4 gs upgrades result in ARPU growth similar to previous quarters? Secondly, he also wants to understand what is causing the operating expenditure to grow by about 9% to 10% year on year on the mobility and asset business side of it. Yeah, I think we saw a much bigger ARPU jump in quarter 2. If I recall, we almost saw a ARPU 5 rupees jump in ARPU in quarter 2. And that came on account of the opening up of the lockdown, which happened towards June, which saw a stronger flow through into quarter. In quarter 3, we saw about R3.5 RPO upside and in quarter 2, we're seeing a R2 RPO increase. As you know, R2 is an outcome of several things, an outcome of the mix of customers or customer additions. So I would not really read too much into INR 1 difference. The underlying trajectory of the upgrades that we're seeing onto our 4 gs base continues to be solid. We have another 140,000,000 users on our own network who need to be upgraded to 4 gs and will happen over a period of time. Plus, of course, there is an opportunity to Upgrade users of other networks on 4 gs, some of them could be 2 gs customers. So I would say, I will not read too much into the INR 1 differential between quarter 3 and quarter 4. Sorry, Umer, I missed the second part of the question. Yes. The second part of the question, Gopal, was that what is causing the operating vendor share in Airtel Business and Mobile grow by 9% to 10% year on year. Well, I think if you look at the sequence and maybe Badal can add a little bit more texture to it, but if you look at sequential growth in operating expenses. The operating expenses on the face of it look a little higher in terms of sequential growth. That is coming on account of 2 reasons. One is the massive rollout of network that we did. We rolled out almost 8,300 sites in quarter 4 and about 5,000 sites in quarter 3. These 8,300 sites obviously have a knock on impact in terms of cost in Q1. The second is increase in prices of diesel. But having said that, remember this quarter also 2 days less. And what happens to most of these costs is that we have monthly costs that hit us, whereas recharge cycles on the prepaid side typically are 28 days or 56 days. So they're not really typically a month, Which is why you if you look at the revenue, it's understated by 2 days, but the cost is overbooked by 2 days. So that's the way I would look at the underlying CapEx. The clear question to ask is what is the marginal EBITDA from the incremental revenue that we have had develop that we've delivered. And I would say that is in the ballpark of 45% to 47%. You would have been happier for it to be around 85% to 60%. But that as I mentioned is on account of the diesel pricing fees as well as the flow through impact of network costs. Other costs have more or less been under. Father, is there anything else or have I covered most of the issue? No. Gopal, you have broadly covered. The 45% which you talked about is for mobile services adjusted for the 2 days, okay. At an overall at a portfolio level at India, our reported number is around 40% EBITDA margin, incremental EBITDA margin. And if you were to adjust for the 2 days, it will be north of 55%. So it's one also has to look at the entire portfolio in together. And as far as Airtel business is concerned, if you look at the margin profile, whether it's an EBITDA and EBIT, it has been consistently stable and increasing. So the costs which are there, which is primarily linked to the cost of doing business revenue, whether it is cost of goods sold or network costs. Thanks, Patil. Gopal, the next question is from Ankur Rudra of JPMorgan. He wants to ask that can you be share any early indication of success of the One Airtel strategy and packages in terms of its penetration within the existing customers and how are we trying to expand this? He also has a second question, maybe I'll ask that after you answer. Yes, I think that's a good question. Just so that I'm clear, the 1 Airtel plan that we launched was in beta form over the last 6 months. And the reason we launched it in a beta form was that The different businesses that we have mobility, broadband, and the DPH businesses, each operate with a different billing stack. And there's a maze of underlying complexity at the bottom of the stack. Our engineers have built a platform on top of the stack In order to stitch all of these systems together and go to market in a seamless way. But with any beta, you will find a lot of bugs. So the reason we went in for a beta is that we were anticipating a lot of bugs and some of that Has been corrected in the last 60 to 80 days. We expect that the revised version of this now We'll go to market in the coming 4 to 5 weeks. Having said that, while we don't report out the numbers, we've already seen Pretty good traction. In fact, we have had to slow down the acceleration of the One NairTel plan. We see almost a INR 500 to INR 600 ARPU increase For the overall account when a customer comes on to the plan between broadband postpaid and DPH because they add another additional service And we have close to half a 1000000 users who've adopted the brand. But like I said, we have personally we have ourselves gone slow In order to fix the bugs because we didn't want to have a broken experience. And when we go back in the next few weeks, we'll go back to the bank. Thanks, Gopal. The second part of Ankur's question is that it's great to see the scale across digital assets. But does the recent carve out of digital assets indicate that these are at a scale where they're ready to be monetized and if we can share any plans of monetization or at what scale would this become meaningful enough to be monetized? I think when you talk about monetization, you're talking about unlocking value, but the way we are looking at monetization to unlock revenues. I think fundamentally each of these businesses now need to start delivering revenues. And if you look at the digital business across B2B and B2C, We are now in a position where they're beginning to deliver sequential growth of anywhere between 15% 20% every quarter. And we are now Pleased with the trajectory. There's still a lot of stuff to be done and it's still very modest compared to the overall scale of the telecom business as for obvious reasons. But this is a business that requires very low capital. The marginal EBITDA of these businesses are very attractive Because the real cost is really around people, the engineering talent and the product talent that we need or the data science talent. And that's where we have made all our investments. We have about 100 people working in the digital side across both the core and these digital services. We also have an interesting model to build these digital businesses. We incubate them to start with. They're very small, they're run by an empowered team. And then once they get to a certain scale, we are now beginning to actually separate those teams, create a little bit more capacity in those teams, a little more investment in those teams in terms of people. So that's the stage that we are in right. And I think as far as we will Share with you the progress on our digital businesses in terms of revenues and so on. We'll do that when we feel the time is right. Thanks, Gopal. The next set of questions are from Aditya Bansal of Nomura. The first set of questions are around home broadband and maybe I'll ask them together. Firstly, do we have any medium term targets in terms of home passes that we want to achieve? Secondly, how much of the sequential ARPU decline would be attribute to down trading versus new users coming in at $4.99 sort of price point and what is the difference in CapEx for whom passed between Bhati connecting it versus the LCO model. And Baader, do you have the ARPU numbers? Yes. So, what we have reported this quarter is around 684. There is a sequential drop, but is all because of the pricing intervention which we had taken in early part of Q3 and we feel that The entire impact of pricing has been now fully baked in. We are not seeing any ARPU for all our new acquisitions. We are not Seeing any further ARPU dilution from these levels despite us having a plan of 499, we think we have a healthy mix of customers being added across the spectrum of plans which we have, dollars 7.99 is one of the most attractive plans which we have. On home passes, which you've talked about cost of home passes, I think the differential between what LCO does and what we does will be close to around 25% to 30% from a CapEx perspective. Differential cost of production, Yeah, CapEx which we shared partially, but overall on the cost of delivering this will be close to 25 what percentage. Thanks, Gopal. There was also a question on any medium term I think the other question was on home passes And I'll just pick that up. I think we expect that in another couple of years with a combination of our own rollout as well as the LCO rollout, We would like to see ourselves in with about 20,000,000 to 25,000,000 home buses. Thanks Gopal. The other set of questions from Aditya Bansal are on the enterprise business. What do you think is the market potential for the enterprise segment? Are we seeing any impact of Jio's launch in this space? I think if I look at the enterprise business, let me kind of Split this into 2 parts. 1 is the connectivity business. The connectivity business market size is about 40 odd 1,000 crores. And this is a business that as I mentioned we've moved market shares from about 23% to 31% if you go by Frost and Sullivan over a 2 year period. Given that 80% of our revenues comes from 20% of our customers, We think there's a real headroom here to continue to grow market share and move this 31% upwards. So that's one opportunity. But actually the other opportunity is beyond connectivity. And if I look at that side of it, that's another 50,000 books. And that includes and I'm just talking about the adjacent areas. Now the margin profile of all of these businesses are a little different, but let me just kind of give some texture to each of these business. There's a cloud communication business, which is where we've entered with Airtel IQ. This is really core to Telco because it's delivering voice, video, messaging, chat and so on through APIs on the underlying telco infrastructure, but doing that in a completely value added way and being able to actually compete with many of the software companies. The second business is cybersecurity. Again, we feel this is very integrated with the connectivity side because when you go to a home Business and you know they don't just look for connectivity, they also look for secure connectivity. So bundling secure connectivity for SMEs, Leveraging the security intelligence center for large enterprises with the trust that people give us in these large enterprises the second area that seems very attractive. The 3rd area is Airtel IoT. This is a connectivity platform or a full end to end platform that's been Built by our engineers, we've launched in the last couple of months. We already have a few 1000000 customers on it, meters and so on and so forth, fleet managers, electric meters and so on. And we think That could be another very interesting opportunity over the next 5 to 7 years. The 4th business is cloud. Now cloud is actually in 3 parts. 1 is the public cloud, which is where you're reselling on behalf of the larger Hyperscale cloud players. And this is where the margin profile is a little lower, but then there is no CapEx. There's also private cloud, Which is our own cloud and our own premises for regulated entities like banks or government and so on. And this is where the margin profile is better. And then of course there's the Telco Edge Cloud, which is our 120 MSCs. And then of course at some stage we have 500 Edge Data Centers For the next few years as the 5 gs rolls out, which again comes with a good budget profile. So if you look at all of these businesses, they are in a way very squarely linked With connectivity, but they are adding value and really approaching customers to solve their real problems, whether it is cost, whether it is experience or whether it is cyber security. And that's really what our strategy is to address the full addressable market of Magdy Calvins. And by the way, in order to do this, there are 2 enablers. 1 is The channel and the go to market capabilities have to really be strengthened because I've been talking to many of the very well run B2B companies and You know, just as learning expeditions to see what is it that we can learn from them. One of the big things that we need to get right is our go to market kit. So our in sourcing of our own field force, our upgradation of channel capabilities, digitizing those capabilities to make sure that Solution selling becomes easy is a very important part. The second part is having product expertise and product specialists You'll be able to sell those businesses when you meet a customer. And the third is actually building out the feature sets and the technology in each of the areas. For example, if you take cloud communication or at AirlineQ, you need to build out several feature sets. Today we are in voice and messaging, but tomorrow we're going to be in video. At Some stage we'll get into the call center space because all of that is the cloud communication suite. Now these will need to be built up and that's the other part that the focus. Thanks, Gopal. The next question is from Tarun Agarwal. His question is that on an ex IOC basis at ARPU has been about 145, 150, and actually growing for the last many quarters. Subscriber addition has been strong and significant, but pricing increase remains elusive, specifically in the background of 200 sort of order 300 outpoint long term. In this context, we believe that lack of pricing growth has more to do with industry dynamic or more on account of underlying subscribers' affordability. No, I think that obviously, I think I've mentioned this before that we have seen markets where You've had periods of even price wars In markets with 3 players, in markets with 2 players like Philippines, 3 players of Thailand or Indonesia, Which in some parts of the country have 5 or 6 players, but in many other parts basically has just one of the players. And it is about the relative ambitions and the relative aspirations of each player. So there is an industry dynamic here. Having said that, I think the good news is that as you know, we are down to a 3 player market, which is in a large market like India, that's great. And at some stage, I think pricing will happen there, because this is the only way in which you can return a reasonable capital return on capital employed. Thanks, Gopal. The next set of questions are on the debt and balance sheet and maybe I'll request Harjeet to take those. Firstly, what is the how does the management see the debt reduction plan for Airtel over FY 2022 to 2023? Is it fair to say that debt has actually peaked out as of now? Secondly, what are the conversations that we're having with rating agencies? And thirdly, is there a plan to raise funds via QIP or a pref issuance? Thanks, Gopal. So I think the question to ask is what's the underlying trend, both what we are seeing and what we have a visibility of. If you see the last 12 months, frankly, I think our net debt has increased by about $3 odd 1,000,000,000 And our AGR liability itself, which we have accounted for as debt is about more than $3,000,000,000 And we've also paid about INR 18,000 crores under the AGR liability as upfront payments. So really the core, ex of AGR, despite our Spectrum upfront load has actually gone down. It is because of the AGR, both the upfront payment and also the new load that has come up, the net debt seems to have increased. The upfront payment of INR 6,000 crores, little more than that was done in March. It's factored into the March net debt. DASH reflects the underlying business both in Africa by itself, which has been reflective to the dividend policy and the free cash flows they have, He's also now building free cash flow pool in India. This will continue clearly. 2, three reasons. Gopal mentioned briefly while the composition of the CapEx is changing, the CapEx had peaked out. So in a way, the EBITDA is growing Both through net adds as also expansions we're upgrading, etcetera. And obviously, non telecom business is growing, Africa growing. So there is a free cash flow pool in India, which will continue to grow. There are dividend paying subsidiaries, including Aeril Africa and Industrial Tower Company. That reflects that the debt should continue to go down from where we are. And obviously, if there's anything non routine, which we're happy to talk about, that's more At the then moment, decision point, whether it's 5 gs or something else. Mind you, some of these increases that we have seen over the last Also despite some bit of acquisition of new stake into Tower Company, if you wind that off, there's a little more debt reduction. The other piece in leverage is essentially how the core EBITDA is performing. I think if you see in a $1,000,000,000 about $1,700,000,000 of EBITDA in this quarter for the company, Which is about maybe close to $700,000,000,000 of annualized run rate. And at that, what the current net debt is Fairly comfortable in terms of overall leverage ratios. Gopal mentioned sub-three. And frankly, if you peel off some of these DOT and AGR related areas, These are not traditional debt pools, neither the FLOs. You will see the ratio is even more beneficial. By the way, in India, which is where the dominant DOT AGI pool is, We have INR 1 lakh 5,000 crores of a little more of DOT plus financial lease obligation. And our debt is more like INR 1,200,000. So essentially it's only INR 2,000,000,000 of any dollar bond debt, etcetera, that we have got. The leverage comfortable, Free cash flow pool there growing. Dividends from the subsidiaries continuous. There is an annuity growth there. CapEx stabilized to marginal reductions as we go through and core leverage ratio is comfortable. Within the leverage ratios, the debt composition is really Not much towards external debt. And that's why I think rating agencies are fairly comfortable. There is no pressure that we are seeing from any of them. In fact, our efforts have always been and they will continue to say that what we see as this APR and DOT debt is more a Very different debt like item rather than debt. And thereby some of the rating agencies are seeing all of that. But that said, current situation, we need to go through the 3 fundamentals of the industry, overall situation for our country's economic growth and our own country's rating, etcetera. So I don't see any large substantial positives on the rating, but there's no reason on the rating side for us to be really worried on in terms of any adversity of that. Thanks, Ajit. The next set of questions, Gopal, around the impact of the second wave of COVID on what are some of the early indicators that we are seeing as far as this wave is concerned as well as the next quarter is concerned? And do we feel that the impact this time could be much stronger than what it was last year, specifically given that the incremental 4 gs penetration is happening amongst the more lower ARPU customers. I think that's a good question. I think we have seen, firstly with this devastating second wave, We are seeing a lot more of fear and insecurity relative to what we saw last time. I think last time was in fact within the company. If you look at the COVID cases, the previous peak that we saw of active cases within the company was September 2020, which was about 2 46 cases. And in April, we hit a new high of almost 1400 cases, about 4.5 times Jump in the number of cases that we saw. The partly it's like I said, partly it's fear and insecurity. There's also a varying stage of lockdown. I would say almost 90% of India is now almost in full lockdown. The balance then is in either a night lockdown So there has been a reduction in economic activity as you can Gomal, can you hear Gopal? No, I think, I think I think you've lost him. I think you've lost him. Let's give him a minute to join back. Yes, sure, Eagle. I think maybe just while Gopal and Alison back, Just wanted to follow through on the last question I was thinking. So I think maybe we were also asked whether there are any monetization plans deleveraging on an inorganic basis. I think that historically we've maintained our stance that we will be opportunistic on the subsidiaries. We've seen towers play off for us. Last year we saw data centers and minority stake monetization, which happened with Carlyle. And I would say it has to build up. But the good news in Africa, both the residual towers portfolio that was waiting to be sold out of the balance sheets that we had. The deals have been signed with Helios Towers As also a minority set of investments from the financial investor, which is TPG, and a strategic investor Mastercard in the Edo Money business. That is also bringing down, the debt in Africa. So overall debt will also reduce over time. And more importantly, that also sort of provides evaluation framework for, Edel Money within the Edel Africa franchise. So I would say while the core is also deleveraging by itself And EBITDA is improving, so that's giving you debt head capacities. And there is monetization flows also expected as we some of these activities. Gopal's just dialing back in. We'll just give him a minute. Yeah, I think he's just joined back as a presenter. Sorry, I don't know what happened. That's happened for the first time in my experience in BlueJeans. Sorry, I don't know where I dropped off. But let me take that question again, I'm assuming that I did drop off. So I think we are seeing some impact at the the second wave of COVID. This impact is both psychological and emotional, which is related to the fear and insecurity amongst customers. The second impact is financial pressures as migrants go back to villages, their incomes and livelihoods have been destroyed. And So some of them are now consolidating this SIMs using 1 SIM between the family, maybe the wife, the child had a SIM, now they're using only 1 SIM. And the 3rd impact of course on acquisitions because of reduced walk ins into our stores, both in the trade as well as in our own stores. All of this is having an impact. We saw the same impact last time. We also did see a sharp recovery in June last year as the markets began to open. Remember 90% of India is now on lockdown. The other 10% is either on a night lockdown or a weekend lockdown. So it's really we are operating in a lockdown situation. I would say that we are so given that softness that we've seen in the month of April, we are currently preparing also for Potential recovery as we see markets opening up, we saw that strongly coming through in June of last year. This So we'll be in readying our go to market efforts, reading our network. So all of that is underway. For the time being, we're putting a lot of emphasis on business continuity. So this is being done through a real great focus on alternate channels, such as chemists, Such as process which are open and of course online, which has now become really meaningful with almost 65% of our business going through on Broadband generally has been pretty good. So, because at this point in time, people do need a lot of broadband. So we saw reasonably good April. And while there has been some softness, I think broadband is looking strong. The B2B business continues to look strong. And so it's the mobility business, particularly amongst lower income consumers, migrants and so on that seem to have been more impacted. I would say that's the broad state of how we are currently conducting the pandemic. Thanks, Gopal. The next set of questions on our digital business, firstly, a couple of people want to know that in all of the areas that we operate in such as cloud security, etcetera. They're very focused domain players who customers would ideally like to prefer. So what is it which is differential in our offering Abhishe allows us to scale these businesses. And the related question is, how do we get good talent for these adjacent businesses? Yeah, I think that's a great question. I think we've had a lot of soul searching to really go in here. And I think we've come to the conclusion that we do not want to be Have our own cybersecurity product, our own cloud service compete with AWS or Google or in fact develop our own content, for example. And I know that a few years ago, we were sort of thinking through the strategy, but I think we've come to that conclusion. Like I mentioned, I think our strengths are the data that we have of our customers, The ability to collect money, payments, the fact that we can access 300,000,000 mobile customers, 20,000,000 homes, etcetera. And of course the network that's the underlying fabric on which a lot can be built, which is location and things like that. So if you look at these businesses just to come back, let's take cyber Airtel Secure is really in partnership with 5 or 6 of the top cybersecurity companies. We have made our own investment in the security intelligence center. We have several almost 100 customers now on this platform, which is enabling us to expand our cybersecurity. In the case of cloud, we are actually partnering with Google and AWS in public cloud. Our private cloud we run for our own needs because for regulation we do need a private cloud and we're able to orchestrate this. We're able to take the same cloud to the regulated entities like banks, financial services, and so on and so forth. And the third is Edge Cloud, which is a unique strength that telcos because telcos are the strongest edge infrastructure in the world where more latency applications can be delivered at a premium. So that's as far as clouds. When you look at Airtel IQ, this is in the core business because this is really about if you're making a call We have food delivery agent on a Sealy app, then the underlying technology that is being powered for that call to APIs inside the app with privacy and all masking features is Airtelike. And this we our teams know how to sell because this is the core of our business. But by the way, this actually gives you great stickiness and actually opens up a new revenue stream. So that's another example of how it or you take ads, in Netl Ads, we're using our 200,000,000 digital assets We actually monetize on top to advertising for a base of customers that's very attractive to most players in India. So I think the way we see it is we see this as leveraging our trust, our access, our relationships, our data, our payment schedule. The second part is that a lot of this still needs to be developed with strong emphasis on technology and talent. And here I think we made a really strong progress. Some of the talent that we've been able to acquire have come from around the world from the best companies, Combination of startups and large technology and internet companies. And they've come to Airtel for a very simple reason. They come here for a job that they are empowered in. They come here because they have a canvas that is large and they can create and solve problems at scale. And I think today we have about 1600 people. The competition is intense because it's tough to attract talent. But our perception of our our capabilities amongst talent has increased dramatically in the last 2, 3 years and a lot of it is on account of the leadership team that we've been able to put in place We're able to then bring people at the next line who are as good, we're then able to bring people to the next line. So I think that's the virtuous cycle that happens when you Get on to this space. So I think that's really what it is. It's not that our attrition is not high attrition continues to be high, but this is the way it is in this Tech industry, attrition in the tech industry is high and you have to deal with it. And as long as people who spent more than 18 to 24 months Then stay with you and go with you. Then you're okay. Some of them may leave earlier on because they are young developers just looking for a higher compensation. Thanks, Gopal. The next set of questions are on DTH and Balu perhaps you may want to take is what does what caused what explains the reduction in DTH subs and ARPU? Is it an industry wide phenomenon? I think the way I would Sorry, Bhartan, I'll just take this and then I'll hand over. The way I would look at it is that if you yes, we did see a softness in the customer base in quarter 4, But we had a strong recovery in April. So I would kind of discount that a little bit. And I would look at it as saying what was it in full year 2019 full year 2020 and full year 2021. We had 1,200,000 users that we added in FY 2019. We had another 1,200,000 in FY 2020. And we've added close to 1,200,000, 1,100,000 precisely. So underlying trajectory is not a source of concern. The challenge in the DTM because of regulatory reasons, R2 is now more or less fixed. So a lot of the growth really has to come from new users. And this is why we have made a bold call to actually integrate the channels, both mass retail and the direct to customer. And we were expecting to have a really very, very solid quarter one, but then the lockdown hit us. My own sense is that some of these capabilities on the 1 Airtel plan as well as the mass retail integration, We think there's still a very strong upside for DTH to gain share from cable and expand its presence. Gopal, one of the questions is on 5 gs. What is your view on 5 gs, the outlook of timing of its rollout and any expectations around auctions this year. I think we were earlier under the impression that auctions could happen by December. This is what we were informally was mentioned. It's not formal, it's not explicit, but we thought that this could happen. And The reason I think also is that today if I look at the last month, 6% of our device shipments, just consumer device shipments are already 5 gs enabled. So it's beginning to start to move and the price of these devices come down to 20,000 as well. Having said that with the pandemic that has hit us, my own sense is that this may get delayed by a few months. So whether it happens in this fiscal or in next year is Nothing to be seen, I think. We have to wait and see what the department does. And Gopal in the interest of time I'll probably take one last question. Are there any plans of any of the promoters to sell any stake in it? No, I think that that was a surprising speculation that I heard this morning. I just want to emphatically state that both the Bhakti family as well as Singtel I have absolutely no intention of any sell out or any stake sell down or any block sale that is happening. So this is just speculative activity And just Uma is flying around the place. So I just want to reassure everybody on this call, there is no such intention whatsoever. In the interest of time, that was the last question. I'll hand it back to you for any closing remarks, please. No, I do want to thank you for this. I think we are in an exceptional time with the pandemic. So my only wish for all of you to stay safe, take care of yourselves and hope to see you soon, physically sooner rather than later. Thank you very much. Thank you everyone for joining the call.