Airtel sees 3G handset prices falling 30% by next year

Bharti Airtel sees 3G gaining due to technology upgrade in the form of Long-Term Evolution-based services, which the company is rolling out.

“3G handset prices are expected to drop by 20-30%, fuelling higher 3G uptake. This will be on the back of introduction of LTE handsets into the country, which Airtel and Qualcomm are set to launch in the first half of 2013. As technology progresses, older technology by default becomes cheaper,” Rajiv Rajgopal, CEO – broadband & data consumer business, Airtel, said.

He said the three main reasons for slow adoption of 3G in the country are a lack of appealing, localised content, high handset prices and high tariffs.

“However, all three can be solved if technology opens up,” he said.
On hopes that data will drive revenues going forward, especially on data-rich platforms like 3G and LTE, Airtel is boosting its free content and ramping up its in-house app store – Airtel Live – to compete with the likes of the Android and Apple app stores.
“Previously the cost of data was high, as any new technology takes time to develop and garner demand. However, looking at growing data consumption patterns, we are increasingly developing free content around news, gaming, video and local content. So far, this has helped us achieve 14 million Airtel Live users,” he said.

Technology growth will also boost the revenue-sharing model between VAS content providers and telecom operators, which is currently skewed 70:30 in favour of operators -- reverse of the case abroad. Due to this, new content development has been scarce. “Based on technology interoperability and stickiness of apps, we are prepared to change the revenue-sharing model to 50:50 going forward,” Rajgopal said. Airtel has also upped its 3G network expansion in areas where it is seeing maximum consumption.

“We have also seen a huge uptake in 3G after slashing tariffs,”he said, adding, tariff cut was done only after an acceleration in 3G adoption was noticed. “Massification of services’ continues to ensure margin profitability, he said.

Airtel is slashing tariffs for 4G too, where it has been able to garner 4,000 customers since its April launch. “Our current 4G tariffs are almost the same as our high speed fixedline services. Right now, 4G speeds range from 10-30 Mbps. However, the speed may reduce to 10 Mbps once we cross around 30% utilisation, he said.