Good afternoon. Thank you for joining us on this webinar to discuss Bharti Airtel's fourth quarter and full year FY 2021 results. Before I hand over to Gopal, I wanted to quickly highlight that we will be conducting a Q&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 interface. With this, over to you, Gopal, for your opening remarks.
Thank you, Komal. Good afternoon, ladies and gentlemen. Thank you for joining us today for this webinar to discuss our results for the fourth quarter ended 21st March 2021, which we announced yesterday. Present with me are Badal, Harjeet, and Komal. 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 five times more than we saw in the previous peak of September 2020. Sadly, we also lost 13 of our colleagues. 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 three of them. In Mumbai, when every other service provider refused to install a broadband connection in the home of a COVID-positive customer, the team of Manoj and Sanjay from Airtel donned their PPE kits, followed the strictest of safety protocols, and did it. Sarfaraz, a store executive in Lucknow, didn't just home deliver a SIM, but also organized urgently required medicines for the customer's pregnant daughter since the family could not step out.
Manoj from Mumbai's fault management team, to ensure that no customers were inconvenienced, worked on a bargaining 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, and be entertained. Now, onto our performance. In the fourth quarter, 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 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 a dditional enablers to these choices The first is digitizing the core to improve experience and eliminate waste.
Second, modularizing these capabilities to drive new revenue streams for products and partnerships. Third, bringing together the power of Airtel through a unified customer view and integrated channel approach. Fourth, 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 the Airtel business. Here, we continue to gain market share, not just annually, but quarter on quarter. In fact, as per Frost & 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 two years. We've now closed the year with an annual revenue run rate of $2 billion.
The fact, however, is that only 20% of our customers contribute to 80% of the business. 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. Wide through hunting and deep through farming. To tap into this opportunity, we are retooling our channels as well as our product portfolio.
Here, we are doing four things. First, we are insourcing our entire SME sales force, which was earlier outsourced. This will lead to upgradation of our SME channel capabilities, helping us gain share. Second, we are building our omni-channel 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. Third, we've entered adjacent areas, we can go deeper with our customers to farm 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 5G-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 wallet. Now to our homes business.
The broadband business has grown to 3 million+ customers on the back of strong demand for home broadband. During the quarter, we expanded our footprint to new towns and cities through our unique LCO partnership model, adding 1 million+ home passes there. We're now present in 200+ 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 two 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've in fact outpaced all other players in terms of performance consistently over the last eight 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 one mass retail channel, which will drive all businesses, mobility, DTH, and the Payments Bank. 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 million high-value homes in India, and we already have relationships with over 30 million 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 is 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 it. Let me now turn to mobile. During the quarter, we acquired precious spectrum.
We now have a pan-India footprint of sub-gigahertz spectrum that will help us cover an additional 90 million customers as we turn on the spectrum in India. We've also substantially strengthened our mid-band spectrum banks across 1800, 2100, and 2300. 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, 33% share of liberalized spectrum.
The strongest holdings in India. Much of the spectrum can also be seamlessly refarmed to 5G 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 CapEx. We have also substantially strengthened our transport network as we ready ourselves for a 5G rollout. Based on our estimates for Q4, we believe we've gained market share and at a new lifetime high.
This performance is on the back of strong 4G net adds at 13.7 million. In fact, over the last year, we've added 43 million 4G customers to the network and 1.9 million net adds to the postpaid segment. It's all been driven by a 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 and ARPU was impacted by a combination of the move to the bill 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 INR 146 to INR 148 on an equated day basis. While this ARPU is the highest in the country, it also shows the massive headroom for ARPU growth. I say this for two reasons. One is the very low level of tariffs in India, which we all know about.
The second is the fact that we have 140 million users on our network who are not on 4G and whose ARPU is less than half that of the average of the businesses. Now to our digital platforms. We reached a significant milestone at 200 million monthly active users. Wynk has 72.5 million, Airtel Xstream has 37.5 million, and Airtel Thanks is at 96.3 million.
As I've said before, we have a three-pronged digital flywheel. First, it allows us to get more efficient and deliver a better omnichannel experience on the core business. Second, it allows us to build new revenue streams on our core foundational strengths of data, payments, distribution, and network. Finally, it allows us to create an ecosystem of partnerships that leverage these strengths. Quick word on two of our digital businesses. Airtel Payments Bank is now rapidly gaining scale.
We already have 54 million 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. Our 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 Safe Pay, 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 allow brands of all sizes to curate consent-based and privacy safe campaigns to 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 brands and are beginning to clock meaningful revenues. Finally, I want to touch on three 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 billion 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, DoT and AGR debt itself account for 56%. In addition, accounting leases contribute to 19% of the debt.
It's also heartening 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. 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 MHz spectrum in three circles in India by entering into a trading arrangement with Reliance Jio.
Let me provide some updates on our ESG initiatives. On our environmental impact, they're aligned with the Paris Agreement. 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 2022 power input through renewable energy sources. Over the last few years, we've reduced our carbon emission per terabyte by 78% against a self-imposed target of 80%.
Sustainability is a mission-critical priority for us, especially since we are 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 through our COVID care team. There are stress and mental health counselors that help relieve people of challenges as they face a new normal. 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 fault 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 ARPU, given the abolition of the IUC regime. To make the ARPU definition even more stringent, we have eliminated the interconnect revenue, as also the interlicense 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. We 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 who's simply latched on to the network, regardless of whether she gives any revenue. The active customers for us in March 2021 stood at 344.4 million. The second definition is revenue-earning customers. These are customers who actually delivered some revenue to us in a rolling 30-day period. This number was 321.4 million. The active number of 344 million will always be slightly higher than the revenue-earning number of 321 million, for obvious reasons.
This is due to what I mentioned already. The active number also includes those customers who will be latched on to the network but have not recharged, so they don't give revenue. Such customers include those who have perhaps not recharged at the end of their validity period. They also include international enrolling customers who may be latched on but don't necessarily give us revenue in the preceding period.
These definitions, we believe, are stringent, they're directly linked to revenue, and they allow you to make a transparent assessment of our performance. Third, 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 would also love to hear your inputs on our transparency standards so that we can continue to raise the bar on this. Finally, a word on our board.
We have an exceptionally qualified board with a diverse skill set that includes expertise across public policy, finance, risk, private equity, technology, and telecom. There are three women directors on our board, and 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&A.
Thank you, Gopal. The first question comes from Kunal Vora of BNP Paribas. In fact, he has two questions. I'll take them one by one. The first one is that Airtel has added almost 16,000 towers in the second half of FY 2021, which is the highest addition in a six-month period. Airtel has also enhanced its spectrum holdings. With these investments, will we be able to lower our CapEx in FY 2022? 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. Thank you for this question. If I look at the overall CapEx profile, I mentioned that our peak CapEx was hit sometime in FY 2018. Since then, we've 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, however, 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 and etcetera. There's a rollout of sub-gigahertz spectrum that we will need to deploy across, and that's the radio CapEx. Of course, there's transport CapEx. Why is all of this important? The transport CapEx is important in the run-up of 5G.
Non-wireless portfolio is important and it's going to get more and more meaningful over time and needs to be funded well. The 4G radio CapEx, I think, will begin to moderate. Having said that, this year we need a rollout of sub-gigahertz spectrum, which is linked to 4G radios, as well as additional deployments to fill our entire coverage across the country, particularly in deep rural 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&P. He wants to know if there's been any increase in competitive intensity in the marketplace as far as Q4 is concerned.
Yeah, definitely. I would agree with that. I think we did see an increase in competitive 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.
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. In the quarter, Q4 2020, we did see some increase in competitive intensity, not on tariff, but more on acquisition and channel commissions.
Thanks, Gopal. The next question is from Vivekanand Subbaraman, PhillipCapital. He also has two questions. The first question is: What is the reason for 1.4% Q2 ARPU growth, adjusted for the number of days, versus the 2.5%-2.7% growth that we've seen in the previous quarter? Didn't the 4G 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%-10% year-on-year on the mobility and Airtel business side of it.
Yeah, I think we saw a much bigger ARPU jump in quarter two. If I recall, we almost saw a INR 5 jump in ARPU in quarter two. That came on account of the opening up of the lockdown, which happened towards June. We saw a stronger flow-through in the quarter two. In quarter three, we saw about INR 3.5 ARPU upside, and in quarter two, we're seeing a INR 2 ARPU increase.
As you know, ARPU is an outcome of several things. It's an outcome of the mix of customers, of customer additions. I would not really read too much into a INR 1 difference. The underlying trajectory of the upgrades that we're seeing onto our 4G base continues to be solid. We have another 140 million users on our own network who need to be upgraded to 4G, and will happen over a period of time.
Plus, of course, there is an opportunity to upgrade users of other networks on 4G. Some of them could be 5G customers. I would say, I would not read too much into the INR 1 differential between quarter three and quarter four. Sorry, Kunal, I missed the second part of the question.
Yeah. The second part of the question, Gopal, was that what is causing the operating expenditure in Airtel business and mobile to grow by 9%-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, if you look at the 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 two reasons. One is the massive rollout of network that we did. We rolled out almost 8,300 sites in quarter four and about 5,000 sites in quarter three. Now, these 8,300 sites obviously have a knock-on impact in terms of cost into quarter one. The second is increase in prices of diesel. Having said that, remember, this quarter, there are also two days less.
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. They're not really typically a month, which is why if you look at the revenue, it's understated by two days, but the cost is overbooked by two days.
That's the way I would look at the underlying CapEx. The real question to ask is, what is the marginal EBITDA from the incremental revenue that we have had developed, that we've delivered? I would say that is in the ballpark of 45%-47%. We would have been happier for it to be around 55%-60%, but that, as I mentioned, is on account of the diesel price increase as well as the flow-through impact of network costs.
Other costs have more or less been under control. Badal, is there anything else or have I covered most of the issues?
No. Gopal, you have broadly covered. The 45% which you talked about is for mobile services adjusted for the two days, okay? At an overall, at a portfolio level at India, our reported number is around 40% EBITDA margin, incremental EBITDA margin. If you were to adjust for the two days, it will be north of 55%.
One also has to look at the entire portfolio in together. 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. 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, Badal. Gopal, the next question is from Ankur Rudra of J.P. Morgan. He wants to ask that, "Can you 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 this.
Yeah, I think that's a good question. Just so that I'm clear, the One Airtel plan that we launched was in a beta form for the last six months. The reason we launched it in a beta form was that the different businesses that we have, mobility, broadband, and the DTH businesses, each operate with a different billing stack.
There's a maze of underlying complexity at the bottom of the stack. Our engineers have built a platform on top of this stack in order to stitch all of these systems together and go to market in a seamless way. With any beta, you will find a lot of bugs. 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 60-80 days.
We expect that the revised version of this now will go to market in the coming four to five 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 Airtel plan.
We see almost a INR 500 to INR 600 ARPU increase for the overall account when a customer comes onto the plan between broadband, postpaid, and DTH because they add another additional service. We have close to half a million users who've adopted the plan. 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. When we go back, in the next few weeks, we'll go back with a bang.
Thanks, Gopal. The second part of Ankur's question is that it's great to see the scale across digital assets. Does the recent carve-out of digital assets indicate that these are at a scale where they're ready to be monetized? 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. The way we are looking at monetization is to unlock revenues. I think fundamentally, each of these businesses now need to start delivering revenues. 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.
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. 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.
That's where we have made all our investments. We have about 1,500 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. 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. That's the stage that we are in right now.
The next set of questions.
I think at some stage, 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 we attribute to down trading versus new users coming in at INR 499 sort of price point? What is the difference in CapEx per home passed between Bharti connecting it versus the LCO model?
Badal, do you have the ARPU numbers?
Yeah.
Yeah.
ARPU, which we have reported this quarter is around INR 684. There's a sequential drop, but this 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.
For all our new acquisitions, we are not seeing any further ARPU dilution from these levels, despite us having plans of INR 499, and we think we have a healthy mix of customers being added, across the spectrum of plans which we have. INR 799 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%-30% from a CapEx perspective. Differential cost of production.
There are CapEx which we shared partially, but overall, on the cost of delivering this will be close to 25 odd percentage points.
Thanks, Gopal. There was also a question on any medium-term target.
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 with about 20-25 million home passes.
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, and 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 two parts. One is the connectivity business. The connectivity business market size is about INR 40,000 odd crores. This is a business that, as I mentioned, we've moved market shares from about 23% to 31% if you go by Frost & Sullivan over a two-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% northwards. That's one opportunity. Actually the other opportunity is beyond connectivity. If I look at that side of it, that's another INR 50,000 crores. I'm just talking about the adjacent areas.
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 ventured with Airtel IQ. This is very core to telco because it's delivering voice, video, messaging, chat, and so on, through APIs on the underlying telco infrastructure.
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. We feel this is very integrated with the connectivity side because when you go to a home or a business and they don't just look for connectivity, they also look for secure connectivity.
Bundling secure connectivity for SMEs, leveraging the security intelligence center for large enterprises with the trust that people give us in these large enterprises is a second area that seems very attractive. The third 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 million customers on it, meters and so on and so forth, fleet managers, electric meters, and so on. We think that could be another very interesting opportunity, over the next five to seven years. The fourth business is cloud. Cloud is actually in three parts. One is the public cloud, which is where you're reselling, on behalf of the larger hyperscale cloud players.
This is where the margin profile is a little lower, but then there is no CapEx involved. There's also private cloud, which is our own cloud and our own premises for regulated entities like banks or government and so on. This is where the margin profile is better.
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 over the next few years as 5G rolls out, which again come with a good margin profile. 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 cybersecurity.
That's really what our strategy is, to address the full addressable market of INR 90,000 crore.
Thanks, Gopal.
in order to do this, there are two enablers. One is the channel and the go-to-market capabilities have to really be strengthened. I've been talking to many of the very well-run B2B companies, 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 capabilities.
Our insourcing 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 who'll be able to sell those businesses when you meet a customer. The third is actually building out the feature sets and the technology into each of the areas.
For example, if you take cloud communication or Airtel IQ, we need to build out several feature sets. Today, we are in voice and messaging. 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. These will need to be built out, and that's the other part that needs to be focused on.
Thanks, Gopal. The next question is from Tarun Aggarwal. His question is that on an ex-IUC basis, our ARPU has been about INR 145, INR 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 a INR 200 or INR 300 ARPU in the long term. In this context, do 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 I've mentioned this before, that we have seen markets where we've had periods of even price wars in markets with three players, in markets with two players like Philippines, or three players as Thailand or Indonesia, which in some parts of the country have five or six players, but in many other parts, basically has just one or two players.
It is about the relative ambitions and the relative aspirations of each player. There is an industry dynamic here. Having said that, I think the good news is that, as you know, we are down to a three-player market, which is, in a large market like India, that's great. At some stage, I think pricing will have to lift, because this is the only way in which you can return a reasonable 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, how does the management see the debt reduction plan for Airtel over FY 2022 to 2023? Is it fair to say the debt has actually peaked out as of now? Secondly, what are the conversations that we are having with rating agencies? Thirdly, is there a plan to raise funds via QIP or a pref issuance?
Thanks, Komal. I think the big question to ask is what's the debt 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 billion. Our AGR liability itself, which we have accounted for as debt, is about more than $3 billion. We've also paid about INR 80 odd thousand crores under the AGR liability as upfront payment.
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, as also the new load that has come up, the net debt seems to have increased. The upfront payment of INR 6,000 crores, a little more than that, was done in March. It's factored into the March net debt.
That reflects the underlying business, both in Africa by itself, which is being reflective to the dividend policy and the free cash flows they have. It's also now building free cash flow pool in India. This will continue, clearly. Two, three reasons. Gopal mentioned briefly, while the composition of the CapEx is changing, but the CapEx had peaked out.
In a way, the EBITDA is growing, both through net adds, as also expansion through upgrading, et cetera, and obviously non-telecom business is growing, Africa growing. There is a free cash flow pool in India which will continue to grow. There are dividend-paying subsidiaries, including Airtel Africa and Indus Towers. That reflects that the debt should continue to go down from here beyond.
Obviously, if there's anything non-routine, which we are happy to talk about, that's more a after then moment decision point, whether it's 5G or something else. Mind you, some of these increases that we have seen over the last one year are 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 dollar billion sense, about $1.7 billion of EBITDA in this quarter for the company, which is about maybe close to $7 odd billion of annualized run rate. At that, what the current net debt is fairly comfortable in terms of overall leverage ratios.
Gopal mentioned sub-three. Frankly, if you peel off some of these DoT and AGR-related areas, which 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 AGR pool is, we have INR 105,000 crore or a little more of DoT plus financial lease obligation. Our debt is more like INR 120,000 crore. Essentially, it's only $2 billion of any dollar bond debt, et cetera, that we have got. Leverage comfortable.
Free cash flow pool there growing. Dividends from the subsidiary is continuous. There is an annuity growth there. CapEx stabilized to marginal reductions as we go through. Core leverage ratio is comfortable. Within the leverage ratios, the debt composition is really not much towards external debt. 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 AGR and DoT debt is more a very different debt-like item rather than debt. Thereby some of the rating agencies are seeing all of that.
That said, current situation, we need to go through the fundamentals of the country, fundamentals of the industry, overall situation for our country's economic growth and our own country's rating, et cetera. 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 on that.
Thanks, Harjeet Kohli. The next set of questions, Gopal Vittal, are around the impact of the second wave of COVID, and 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. Do we feel that the impact this time could be much stronger than what it was last year, specifically given that the incremental 4G 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 246 cases.
In April, we hit a new high of almost 1,400 cases, so about a 4.5 times jump in the number of cases that we saw. 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 a full lockdown, and the balance then is in either a night lockdown or a weekend lockdown.
There has been a reduction in economic activity, as you can well imagine.
Komal, can you hear Gopal?
No, I think, I can't hear him.
I think we have lost him.
Yeah.
I think we lost him. Let's give him a minute to join back.
Yeah.
I'm sure he will. I think maybe just while Gopal dials in back, just want to follow through on the last question that I was thinking through. I think maybe we were also asked whether there are any monetization plans, de-leveraging 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. 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 Airtel Money business.
That is also bringing down the debt in Africa, so overall debt will also reduce over time. More importantly, that also sort of provides a valuation framework for Airtel Money within the Airtel Africa franchise. I would say while the core is also de-leveraging by itself and EBITDA is improving, so that's giving you debt head capacities and there is monetization flows also expected as we do 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 on BlueJeans. Sorry, I don't know where I dropped off, let me take that question again, I'm assuming that I did drop off. I think we are seeing some impact of 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. Some of them are now consolidating their SIMs, using one SIM between the family, maybe the wife, the child had a SIM, now they're using only one SIM. The third impact, of course, is on acquisitions because of reduced walk-ins into our stores, both in the trade as well as at 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. We are operating in a lockdown situation.
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 will mean readying our go-to-market efforts, readying our network. All of that is underway. For the time being, we are putting a lot of emphasis on business continuity.
This is being done through a real great focus on alternate channels such as chemists, such as grocers, which are open, and of course online, which has now become really meaningful with almost 65% of our business going through online. Broadband, generally has been pretty good. At this point in time, people do need a lot of broadband. We saw a reasonably good April.
While there's been some softness, I think broadband is looking strong. The B2B business continues to look strong. 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 confronting the pandemic.
Thanks, Gopal. The next set of questions are 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, et cetera, they're very focused domain players who customers would ideally like to prefer. What is it which is differentiating our offering and which allows us to scale these businesses? The related question is, 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 there. I think we've come to the conclusion that we do not want to have our own cybersecurity product or our own cloud service compete with AWS or Google or, in fact, develop our own content, for example. 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 million mobile customers, 20 million homes, et cetera. Of course, the network, that's the underlying fabric on which a lot can be built, which is location and things like that.
If you look at these businesses, just to come back, let's take cybersecurity. Airtel Secure is really in partnership with five or six of the top cybersecurity companies. We have made our own investment in the security intelligence center. We have almost 100 customers now on this platform, which is enabling us to expand our cybersecurity offer.
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 are able to orchestrate this. We are able to take the same cloud to the regulated entities like banks, financial services, and so on, so forth.
The third is edge cloud, which is a unique strength that telcos have because telcos have the strongest edge infrastructure in the world, where low latency applications can be delivered at a premium. 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 to your food delivery agent on a the app, then the underlying technology that is being powered for that call to APIs inside the app with privacy and call masking features is Airtel IQ. Our teams know ourselves because this is the core of our business. By the way, this actually gives you great stickiness and actually opens up a new revenue stream. That's another example of how it-- or you take Ads.
In Airtel Ads, we're using our 200 million digital assets to actually monetize on top through advertising for a base of customers that's very attractive to most players in India. I think the way we see it is we see this as leveraging our trust, our access, our relationships, our data, our payments capability.
The second part is that a lot of this still needs to be developed with strong emphasis on technology and talent. 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. 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. I think today we have about 1,600 people. The competition is intense because it's tough to attract talent. Our perception of our capabilities amongst talent has increased dramatically in the last two, three 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 at the next line. I think that's the virtual cycle that happens when you get onto this space. 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.
The attrition in the tech industry is high, and you have to deal with it. As long as people who spent more than 18-24 months then stay with you and grow with you, then you're okay. Some of them may leave earlier on because they're young developers just looking for a higher compensation.
Thanks, Gopal. The next set of questions are on DTH and Bharti perhaps you want to take. What explains the reduction in DTH subs in ARPU? Is it an industry-wide phenomenon?
Bharti, I'll just take this then I hand it over. The way I would look at it is that yes, we did see a softness in the SME base in quarter four. We had a strong recovery in April, I would kind of discount that a little bit. I would look at it as saying, what was it in FY 2019, FY 2020, and FY 2021? We had 1.2 million users that we added in FY 2019.
We had another 1.2 million in FY 2020, we added close to 1.2 million, 1.1 million precisely in FY 2021. Underlying trajectory is not a source of concern. The challenge in the DTH because of regulatory reasons, your R2 is now more or less fixed, a lot of the growth really has to come from new users.
This is why we have made a bold call to actually integrate the channels, both mass retail and the direct to customer. We were expecting to have a really very solid quarter one, but then the lockdown hit us. My own sense is that some of these capabilities on the One 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.
Okay. Gopal, one question is on 5G. What is our view on 5G, the outlook of the 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 informally was mentioned. It was not formal, it was not explicit, but we thought that this could happen. 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 5G enabled.
It's beginning to start to move, and the price of these devices come down to INR 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. Whether it happens in this fiscal or in next year is something to be seen. I think we have to wait to see what the department does.
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 was a surprising speculation that I heard this morning. I just want to emphatically state that both the Bharti family as well as Singtel have absolutely no intention of any sellout or any stake sell-down or any block sale that is happening. This is just speculative activity and just rumors flying around the place. I just want to reassure everybody on this call, there is no such intention whatsoever.
Thanks, Gopal. In the interest of time, that was the last question. I'll hand it back to you for any closing remarks, please.
I do want to thank you for this. I think we are in an exceptional time with the pandemic. My only wish for all of you is 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.