Airtel's data centre business Nxtra, Indus Towers merger unlikely: CEO Vittal

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₹5,000 crore on data centres over the next few years, Vittal said, which is similar to the capex it had outlined in 2021 for three years. Having postponed its call for a ₹15,000-crore rights issue due to strong cash reserves in the business, the Sunil Mittal-promoted carrier will look at paring expensive debt and distributing dividends to shareholders, as a mix to channel the future free cash flows. The telco paid ₹24,250 crore high-cost spectrum dues from the 2012 and 2015 auctions.

Cash flows are also likely to get a leg up once the real impact of the June tariff hikes begin to show in the September-December period. While noting that it was too early to talk about the full impact of the tariff hikes, Vittal said that some SIM consolidation has been seen in the 2G user base in the early weeks of the tariff hikes, but the shift towards lower costing data plans was little, in line with its expectations. SIM consolidation refers to consumers letting go of their second or third SIM cards and cutting the spending on these extra connections.

He reiterated that reasonable returns on investment would be achieved only once the average revenue per user, or Arpu, reaches ₹300. “I want to underscore that the industry needs a minimum of ₹300 Arpu for long-term sustainable investment and respectable return ratios… Tariff repair, we believe, should support improvement in financial health and a modest improvement in return ratios," he said. Airtel’s Arpu increased sequentially to ₹211 for the quarter ended June, from ₹209 in the March quarter.