I must remind you that the overview and discussions today may include certain forward-looking statements that must be viewed in conjunction with the risks that we face. Post the management opening remarks, we will open up for an interactive Q&A session. Interested participants may click on Raise Hand option on Zoom application to join the Q&A queue. The participant may click this option during the management opening remarks itself to ensure they find a place in the queue. Upon announcement of name, participant to kindly click on Unmute Myself in the pop-up on screen and start asking the question post-introduction. With this, I would like to hand over to Mr. Gopal Vittal for the opening remarks. Thank you. Good afternoon, ladies and gentlemen. Thank you for joining us on this webinar, to discuss Bharti Airtel's results for the quarter ended 30 September 2022. Also present with me on this webinar are Soumen, Harjeet, and Arpan. I want to focus this quarter's earnings calls on three things. Our performance and the strength of our portfolio, an update on 5G and why we believe this will, in the short term, give our business a fillip, and finally, the opportunity in rural. Before I dive in, a few words on ESG. During the quarter, we progressed towards our ESG targets. Nxtra became India's first data center company to deploy fuel cell technology. The aim here is to reduce carbon emissions through a cleaner hydrogen-ready fuel supply while unlocking cost benefits. Nxtra is committed to achieving 50% of its power requirements through renewable energy sources in the next 12 months. Our core network operations have started experimenting with solar power and diesel elimination, and given us confidence on getting to our ESG goals. Our headquarters at Gurgaon received gold LEED certification last month. The certification is based on LEED v4.1, a next generation standard for green building, design, construction, operations, and performance. As a recognition of our ethics and transparency, we received the prestigious Golden Peacock Global Award for Excellence in Corporate Governance for 2022. Let me now turn to our performance and portfolio. We've had another steady quarter for Airtel. Our consolidated revenues for the quarter grew sequentially by 5.3% to reach a little over INR 34,520 crores. In India, our EBITDA margins improved to 51.8%, benefited by continued cost control and the SUC benefits which were part of the seminal telecom reforms of last year. 5G spectrum acquisition optically increased our debt levels while our de-leveraging continued on the back of tight fiscal prudence and strong operating leverage. Equally, we continued our War on Waste program to help fuel margin improvements. Despite this performance, our South Asia and India return on capital employed is at 8.4%. For a business that takes risk and puts in substantial CapEx in order to drive digital adoption, we believe this level of ROCE is very low. The only way to help remedy the situation is a tariff correction. Let me now comment on our various businesses and why each part of our portfolio creates greater customer stickiness while driving premiumization. Let me start with Airtel Payments Bank. Our payments bank has now crossed the milestone of 50 million monthly transacting users and clocked $25 billion of annualized GMV. Our take rates are now at 0.61%, the highest in the industry. This translates into an annual revenue run rate of INR 1,233 crores, and we are the only profitable fintech player in the industry. The interesting and unspoken part of this business is that our telco churn comes down by almost 50% the moment a customer's bank account number is the same as her mobile number. Our digital services saw an annualized revenue of INR 960 crores, up from the previous quarter's run rate, growing sequentially at well over double digits. I mentioned before that these services have been built on some very significant digital capabilities that are helping our core business. We see our business in three parts: the underlying digital infrastructure, including the massive data infrastructure we've created. The digital experience layer that follows the customer through their life cycle, enabling them to discover, buy, experience, refer. Finally, our digital services layer that leverages the foundation to create revenue streams at very low capital outlays. This is what makes our digital play special. Now on to Airtel business. This business, as I said before, is a jewel in our portfolio. Over the last many years, we've delivered sustained, profitable and competitive growth in this business. This quarter we continued our momentum to deliver strong sequential growth of just under 7%. This has helped cement our position in the B2B market by hitting a landmark of being the largest listed player in the B2B space in the country. Based on the results declared of the other players, it is clear we have solidified our position and gained revenue market share. The consistency of our performance can be attributed to four underlying reasons. The trust we enjoy with our customers, the value we place on privacy of data and transparency in dealings, a steadfast focus on emerging businesses, including CPaaS, security, data centers, cloud, IoT, and solid execution of our go-to-market strategy of going wide and deep. Wide to cover more accounts where we are not doing as well, and deep to create much more meaningful relationships with our customers by serving them with more and more products and solutions. Let me now turn to our home split. Our broadband business continued its acceleration on the back of growing need for reliable and consistent broadband in India. We're now present in 1,060 cities through a combination of our own infrastructure and the LCO model. This has helped us add 417,000 customers and report about 7% sequential revenue growth during the quarter. While the DTH business saw a decline of 2.6%, I'm actually glad the outcome of the strategy we put in place a few months ago is showing early signs of having delivered and creating some momentum. Our strategy was simple. Double down on the largest cable markets of the South, Maharashtra and Bengal. Simplify pricing and make it easier for customers to choose their content. And finally, bring the full power of our convergence proposition to win the high-value game. While doing that, bundle OTT content, linear content, along with broadband and mobile, which is Airtel Black. This strategy is now seeing traction. The months of August, late August and September have seen growing momentum. October has been even stronger. To give you an accurate picture of the business, we're now harmonizing the definition of what constitutes a customer with our mobile business. As a result, we are applying the same stringent criteria to this business. A customer will be recognized as such only if he or she is a revenue-earning customer. This means that the customer has to give us some revenue in a rolling 30-day period. We use the same definition in our mobile business as well. I am more confident than ever before that we will deliver market-beating performance in this business going forward. Let me now turn to the mobile segment. The mobile business saw sequential revenue growth of 4% on the back of up trading, continued feature phone to smartphone upgrades, and our focus on data monetization based on our digital capabilities to get users to buy extra data on any day within the plan cycle when their allowance runs out. As a result, our ARPU moved from INR 183 to INR 190. This was achieved on the back of 5 million 4G net additions, a recovery from last quarter. Our postpaid segment saw net additions of 300,000. With this, we are now the decisive leaders in postpaid. In sum, we delivered steady results to grow our market share across all businesses. I believe we are very well positioned as a portfolio due to two critical reasons. Each part of our portfolio helps our overall premiumization strategy by moving people up on the ARPU ladder, from feature phones to data users, to postpaid, to broadband and eventually Airtel Black. We see a clear doubling of ARPU at every step. We see this ARPU ladder providing us a strong runway for growth. The second reason is that when a customer buys more than one product in our portfolio, be it a digital service, consumer product, or an additional B2B product, we see a dramatic reduction of churn. The way we think of our business objectives when we look at our portfolio is simple. Grow share of wallet on the one hand and drive stickiness on the other. Let me now turn to the second part of my opener, 5G. There are four advantages we offer 5G that work seamlessly on all 5G devices. 5G works seamlessly on all 5G devices. All of Xiaomi, Oppo, Vivo, and Realme devices are now ready for our network. Samsung and OnePlus will be fully ready in the next couple of weeks. Apple soon thereafter. It looks like Apple will be ready by around mid-November to early December. This cannot be said with alternate technologies, where many devices will deliver either an inferior experience or simply not work on 5G. A second advantage that we offer is superior experience. With our anchor band riding on the underlying 4G layer, our 5G band covers an additional 100 m to provide a compellingly superior experience. The third advantage is that our solution is more power and carbon efficient for India. Finally, the cost of producing a gigabyte in India is the lowest for India. Onto our plans for rollout. We've now commenced our Airtel 5G+ launch starting with key cities. By March 2024, we expect to cover all towns in urban India, as also key rural areas. As the network starts getting built out, we will see a significant part of our existing data traffic on 4G move to Airtel 5G+. This is important since it will allow us to gradually move more and more spectrum to 5G at the flick of a button. We have also started testing the SA mode on 5G. This mode may be relevant for some enterprise use cases. While these specific use cases are very niche, we're already doing our trials to serve customers where needed. We are also testing our millimeter wave spectrum for fixed wireless access. You will hear more about our plans on fixed wireless access in the coming months. Finally, let me just comment on the use cases. The use cases for 5G are still nascent outside of high-speed broadband. That said, we are working across a large number of companies, including startups, to test out use cases. These use cases span experiential education using virtual reality, connected ambulances to save lives, productivity enhancements in manufacturing and agriculture, logistics and entertainment. These were showcased recently at the India Mobile Congress. Over time, some of these use cases could potentially be game changing for the country. At the end, while many of these use cases could come into India over the next few years, we believe that there is a serious short-term opportunity to grow share and disproportionately win quality customers leveraging the power of 5G. Given the financially pressed situation that one of the players in the industry is going through, we feel that the moment is right for Airtel pulling ahead and being decisively the most aspirational brand in India. With this, we hope to take a further lead, particularly in the postpaid segment. Let me finally turn to rural. In the last 10 years, we've moved our population under coverage from around 87% to 96%, yet we believe there is still headroom for expansion and growth. We now see over 40% of industry 4G net adds coming from rural areas and believe the time is right to bridge a substantial part of the coverage gap in mobile against the leading player in the industry. As we do this, we are applying a whole host of lessons that we have learned. We are using our data science models to determine exactly where to go. At the same time, we're sending our people to the field to determine exactly where the opportunity is. Even more important, we have designed and built lower cost sites that will allow us to expand profitably. As you're aware, we take great pride in treating every single network tower as a factory in itself, and we monitor the revenue and profitability across all 254,000 locations. Our plan to expand rural coverage based on these lessons will lead to sustained competitive performance and be done profitably. With the sub-Gigahertz footprint we now have, this will provide customers with a very good proposition, thereby fueling our growth. In sum, we are now at an exciting juncture. Our portfolio is deep and resilient. It acts as a virtuous flywheel for our business, creating greater stickiness and providing opportunities to grow the share of wallet. Our performance consistency is in large measure due to the strength of our simple strategy backed by this powerful portfolio. We are ready and rolling with 5G. While in the short term there may not be too many next-gen use cases, we believe Airtel 5G+ will be a strong lever for us to grow quality customers. Finally, rural, where our network coverage is lower, is a massive opportunity for us, and we will use all the lessons we've learned to roll out prudently and quickly. With this, I want to open the floor for Q&A session. Thank you very much, sir. We will now begin the Q&A interactive session for all the participants. Please note that the Q&A session will be restricted to analysts and investor community. Due to time constraints, we would request if you could limit the number of questions to two per participant to enable more participation. Interested participant may click on Raise Hand option on Zoom application to join the Q&A queue. Upon announcement of name, participant to kindly click on Unmute Myself in the pop-up on screen and start asking the question post-introduction. The first question comes from Mr. Manish Adukia from Goldman Sachs. Mr. Adukia, you may please unmute your side and ask your question now. Yes. Hi, good afternoon. Thank you so much for taking my questions. My first question is, Gopal, on the market share dynamics that you talked about as a result of 5G, where you said that, you know, especially in the postpaid segment, you do expect that market shares could potentially move up for Airtel. Just wanted some clarification. Are you suggesting that you expect your market share trends to accelerate? I mean, they have already been expanding in the last few quarters, so as a result of 5G, do you expect that trend to accelerate? A related question to that, I mean, why should market share dynamics change? I mean, the number three player has generally been weak on the balance sheet and free cash flow. What would change as a result of 5G that you believe your market share could further inch up higher? My second question is on free cash flow. The India business has started generating meaningful amount of free cash flow, and with no near-term spectrum payment, the free cash flow is only likely to go up higher. How do you think about the use of cash over the next, two or three years, given, you know, spectrum and AGR payments are still, some time away? Thank you. Thank you. I think, you know, I don't wanna comment on whether our market share will accelerate or not. I think you just have to look at our track record. Thus far, it's been consistent and steady. We've grown market share substantially over the last 8-10 quarters. We believe there still is a big runway for growth, competitive growth, and this is really around two parts. One is our strategy of going rural, which is where we have a big gap with our leading competitor, and we believe that this could be an opportunity for us to recover ground, given that we're not present in many of these villages, across the country. The second part is really a high value game, and this is what plays to our strategy. I think our whole strategy is based on quality customers. Whatever we do, whether it is the way we drive stickiness through multiple services and bundling it, or whether we use our data science models to actually drive greater share of wallet, all of that plays to our advantage. I think 5G, in addition to this, is a fillip to actually have a narrative going which actually makes us a very aspirational brand. For us, the reason we are also excited about is that our technology, which is Airtel 5G+, will really work on every single device. Like I mentioned, I think, you know, Samsung, there are 27 models of 5G, 16 models are already ready and enabled. The rest will happen by early November, so around 10th to 12th of November. OnePlus, all 17 models will work on our network. Vivo, all 34 models will work on our network. Realme, all 24 models will work on our network. Xiaomi, again, all 23 models will work. Oppo, all 14 models will work. Apple has 13 models. They will have their release around first week of November, and by mid-December we should have it all ready. Now, I can't say the same for our competition because they're choosing a different technology. For all of these reasons, I think we have a real window of opportunity to really step up our act on customer experience. As you know, Manish, ultimately customers want experience and that's really where we wanna focus. On the free cash flow front, on the use of cash, I think, you know, we are a prudent company. We'll continue to pay down our debt, retire some of our bank debt, make sure that we, you know, prudently pay off, again, wherever prepayments are to be done, so that will also be done. The third part is really around CapEx, where we will be looking at, you know, rolling out both 5G as well as rural in the coming year. There could be some elevation of CapEx in the short term, which is fundamentally an advancement of CapEx from the following year. If you take 2023-2024, we may advance some CapEx from 2024-2025 to 2023-2024. Thank you. Just a quick follow-up question on the market share response. You also talked about in your opening remarks about, you know, a need for tariff repair. Are you suggesting that the increase in market share and tariff repair in the industry can go hand in hand? Or do you think until, let's say, the market share dynamics fully play out, there should not be any meaningful tariff, let's say, intervention in the foreseeable future? Well, I hope that, you know, our wish would certainly be that tariff repair happens sooner rather than later. Because remember, there is a massive investment that is happening today as we speak, at INR 190 ARPU while, you know, we do have the highest ARPU in the industry. The fact is that this ARPU was actually higher 7 years ago. It was almost INR 200. Secondly, if you look at the pricing structure today in India, whether it is ARPU or whether it is the rate per megabyte, rate per gigabyte, it is the lowest in the world. Lower than Sub-Saharan Africa, lower than, you know, our neighboring countries here, lower than Southeast Asia, let alone the developed markets. Every player will want a return on capital. Our belief is that 8.5% return on capital is very low. I mean, you know, you don't need to take the risk that we do in putting in all of this investment. This money can be just put in a bond and you can still earn around that level of interest. The fact is that this return on capital needs to go up and the only way that it will go up is if there is a tariff correction. We're not talking about massive corrections. We're already at INR 190 ARPU. We need to see one round of correction. When it will happen, I'm not at liberty to say because it's not just up to us, right? I mean, if we do it and competition doesn't follow then we have a problem. We are watching the space and we'll see it when the time is right. Thank you so much. I'll jump back into queue. All the best. Thank you very much, Mr. Adukia. The next question comes from Mr. Piyush Choudhary from HSBC. Mr. Choudhary, you may please unmute your side and ask your question now. Yeah. Hi. Thanks. This is Piyush Choudhary from HSBC. A couple of questions. Firstly, on the subscriber trends, we are seeing some tepid growth since last one year, and you alluded to rural push now. So in light of that, can you give us like whether Bharti subscriber or other industry subscriber growth would remain muted or you think it could accelerate from here going forward? Secondly, you know, there has been a steady and strong execution and market share gains for you. At this point of time what do you foresee as key risks or challenges to the business? And if any, what are the steps taken to mitigate that? Thank you. Well, I think that, you know, the answer to your first question, Piyush, is that, as I mentioned in the last earnings call as well, we have seen pressure on semiconductor prices over the last 6-8 months. Actually, since March 2022, which have pushed up the price of smartphones in the industry. If you go back in time and look at the entry-level smartphones, these used to be about INR 6,500 vis-à-vis a feature phone which would be in the ballpark of INR 1,000. Today an entry-level smartphone is more like INR 9,000, INR 8,500-INR 10,000. A reasonably good phone is about INR 10,000, close to INR 10,000. Now imagine a poor customer who has a feature phone and who's made a decision to come into a shop and change to a smartphone, and his, in his mind has been told that the price is about INR 6,500-INR 7,000. He lands up in the store and finds out it's actually INR 10,000. He is gonna walk back and go away. And that's why we've seen across the industry a 30-odd percent reduction in feature phone to smartphone upgrades. This is by the way, it's across the industry. Now, typically what happens is, at least I've seen in consumer categories, is when you have a period of high inflation it takes some time for this shock to settle in. The second time he comes back, he knows it's INR 10,000. When he comes back, he's prepared to pay INR 10,000. I think it just has to be some way to ride this out. We've seen some improvement in 4G upgrades this quarter, as you know. It's not a big improvement. You know, we were at 5 million. I think last quarter we were close to 4 million or just under 4 million. There's been some improvement, but it's not good enough. We're hoping that this comes back. On the second question on risks, I think that you know, there are always risks in this business. I mean, there are risks in every business. We have a robust process of risk and assessing risk within the company. If you were to pin me down and say, what are the big risks? I think I see it more as opportunities, but certainly there are some risks. We had risks around geopolitical risks, around suppliers. That's now sorted. I think supplies of equipment is one, but the bigger one is really around talent. You know, attrition generally post-pandemic has been high for most industries. We are slightly lower than what I've heard is the attrition across other companies. It's a continuous process of making sure that we play to our strengths of really the culture that we offer our employees, which is a culture of empowerment, a culture of ownership. That is something that, you know, we've got to just keep reinforcing and find ways to get across for every person who joins us, newly. Thanks a lot, Gopal. Thank you very much, Mr. Choudhary. The next question comes from Mr. Sanjesh Jain from ICICI Securities. Mr. Jain, you may please unmute your side and ask your question now. Hello. Good afternoon, Gopal. Thanks for taking the questions. First from my side is on the ARPU. 3.6% look extremely strong. Can you help us understand what's leading such a strong ARPU growth? You did mention about data monetization, but I think that has been the case for a while. But why is such a big inflation in this quarter? And also help us understand how sustainable it is. Can this kind of data monetization opportunity continue for a few more quarters where despite no tariff hike, we should be able to achieve 2+ kind of a sequential growth in the ARPU? That's the first question. Second is on the data digital revenue. I think for the first time, we have disclosed that number for the quarter at INR 960 crore, which has grown double digit sequentially. Can you help us understand how much of it is coming from the enterprise of the business? How much of it is coming from the consumer side of the business? And within the consumer, what is really driving the growth in the digital services? These are my initial two questions. Thank you. Thank you, Sanjesh. I will not comment on what our estimates are for the future and whether they're sustainable. I just tell you the reasons why this ARPU has gone up. I think the point number one is that we are now applying a lot more sophisticated understanding of which customer to really go after. The acquisition machinery that we have, while the churn looks on the face of it elevated, I think we're improving every week the quality of our acquisitions. That's one driver. The second driver is the upgradation from feature phone to smartphone, which is an ongoing thing, as you know, that's the 5 million that we talked about. The third is the premiumization from within prepaid to postpaid. I think this quarter we also did what we call data monetization, which you referred to, where I think we use a lot of very contextual and scientific triggers to identify an individual consumer who is blowing through his or her data allowance on a given day. Because, you know, most of our prepaid plans are 28-day plans or 56-day plans. The moment you blow through that allowance on that given day, we were really able to dramatically improve the experience of buying a 1-day, 3-day or 7-day data top-up for that plan cycle. I think it was a combination of all of this which led to the ARPU performance. I think on the digital revenue, we have three streams of digital revenue. One is our marketplace revenue, which is where we, you know, use content and things like that. Also we're doing some pilots on financial services where we are, you know, distributing credit cards on behalf of some of our partners on our platform, plus trying out some lending based on understanding of our data along with content. That's the marketplace piece. Second is our advertising part, which is really using our platform to drive advertising revenues. The third is Airtel IQ, which is our SaaS model, which really solves specific problems using our core network stack. That is really what the three sort of drivers of this are. you know, we're not yet disclosing very specifically how each of this add up, because, you know, these are still nascent, still volatile. At the right point in time, you can be assured that we will start disclosing more texture to this. Thanks, Gopal. Just a couple of bookkeeping questions. One on the cost inflation, I think selling expenses have significantly gone up. Why? And this trend has been at least, both the player who have announced the result, this has been a common thing. And the second one is how much SUC is still pending, for us, which may accrue us in next quarter. That's it from my side. Thank you. Soumen, you wanna take that? Yeah. I think on SG&A, there are multiple initiatives which is going to the market. We are driving our homes GTM team, we're rolling out new outlets. Also there has been a certain amount of attrition which has continued in the market, which has pushed up the SG&A pieces. As far as SUC is concerned, we've, as you know, it was rolled out mid of August, so we've realized half of it, half will be carried forward to the next quarter. Next quarter we'll realize the full quarter benefit. Will it be in the ballpark number of close to INR 300 crores-INR 350 crores still coming in the next quarter? No, a little less and more in the range of about INR 250. Thanks, Soumen. Thank you very much, Gopal. Thanks for all the answers, and best of luck for the coming quarters. Thank you. Thank you, sir. Thank you very much, Mr. Jain. The next question comes from Mr. Shubhradeep Mitra from UTI Mutual Fund. Mr. Mitra, you may please unmute your side and ask your question now. Yeah, hi. Thank you for the opportunity. Just wanted to have your guidance on the tower addition, given that we are now rolling out 5G in India. Over the next 2-3 years, if you can give out, you know, what would be the expected level of tower addition which you are looking for from your, sort of, the tower company sector analysis. Sorry, what do you mean by tower efficient? I didn't understand. Tower addition. Tower addition. I see. Okay. Got it. That's the only question, Shubhradeep? Yeah, that's the only question. Okay. No, I think, you know, the existing 5G technology is basically going on to the existing towers. We are unlikely to be in the medium term, forget about short term, for the next couple of years, 2-3 years, building more sites on account of 5G because as I mentioned, the propagation of 3.5 GHz is 100 m more on the downlink. In fact, it is better than the 2.3 GHz, the TDD band. Because on the mode that we've applied, which is on Airtel 5G Plus, you do get 100 m more on the downlink, and that gives you phenomenal experience even indoors without any densification. Over time, as the capacity grows, maybe 5, 7 years out, 10 years later, as the capacity starts growing, yes, there will be some densification, but right now there is no sign of that. I think the place we are creating more towers, which will be leaner towers, will be for rural area, where we are trying to see what we can do to reduce our dependence on diesel, and really going for very lean sites which actually come at a much lower cost than the operating cost per month that we are subjected to today on networks on account of, fuel and rental. Sure. Thank you so much. Thank you very much, Mr. Mitra. The next question comes from Mr. Kunal Vora from BNP Paribas. Mr. Vora, you may please unmute your side and ask your question now. Yeah. Hi. Thanks for the opportunity. My first question is on margins. How should we look at EBITDA margin on incremental revenue going forward with investment in 5G and rural coverage? Would the margin on incremental revenue get impacted? In the past you talked about 60%-65% margin on incremental revenue. Would that still hold? I think, Kunal, firstly, as you can well imagine, the 5G will certainly load on additional cost. Unless there is a serious improvement in tariffs, this will be an additional cost on the P&L. That said, I think we have to work harder on our War on Waste program. We are looking at all kinds of avenues to see what we can do on War on Waste, which includes further elimination of diesel, use of solar to reduce the overall energy bill, particularly in rural areas where we have space to put up solar solutions. We're looking at further digitization of our business to bring down cost of serving customers. I think in the short term, there has been an elevation in sales and distribution costs because of competitive intensity on account of channel commissions. We're gonna use a lot more sophisticated techniques to see how we can be even more efficient in what we offer channels to acquire the right quality customers. There's a whole bunch of things. I think we just have to work harder to stay in the same place, and that is our effort right now. Sure. That's helpful. Just a follow-up on the first question on churn, like, the premium remains fairly elevated, 3.3% monthly, almost 40% annual. When do you see that stabilizing? Yeah. I think the churn, as I mentioned, is elevated, and we're not happy with the level of churn. I think the large reason for the churn is less churn of tenured customers who've been with us more than nine, 12 months, but really poor quality of acquisition. This is why I said that we are really trying to see what we can do to improve the quality of acquisition so that we can get a control on this churn. This is finally happening in the market because fundamentally, there's an arbitrage in pricing where a new SIM is available for probably a lower price, given the channel commissions, than what you would pay for an existing plan. That leads to, you know, arbitrage. It is something that's a menace in this industry. It's been there for many, many years. It's gotten worse in the last few months, but I think we just have to find a way to get more clever, more sophisticated about what we're doing. There are many pilots that we have done in the last 30, 40 days, and we're hoping that some of these will roll out now in the coming weeks and months. Thanks. My second question is, if I observe, like, IoT and M2M connections almost doubled over the last one year. Can you help us understand the potential size of this market? What are the main use case? What are the customers really doing, the growth trajectory which we can expect? Also what kind of ARPU you're making on these IoT and M2M connections? Yeah, I think that historically, what we've done is I think about three, four years ago, we moved this M2M business under the B2B reporting because it's really a B2B business. The reason we called it out in our investor pack this time as part of postpaid is because we wanted you to get a fair comparison of what really is our postpaid business when compared to our competitors, because that's when they report postpaid, they report it along with M2M and IoT. This is why we disclosed it, because we wanted you to get a true and fair representation of what's happening. I think the M2M business is driven by multiple use cases. Fleet management, it's going into cars, it's going into ATMs, it's going into meters. Large contracts, large plans by governments to, you know, move to electronic metering based on IoT devices. GSMA did a study, I think, a few years ago, where, you know, they were talking about a few billion machine-to-machine devices over the next few years. This is something that certainly is a big growth opportunity. The individual ARPU of an individual SIM is very low. I'm not at liberty to disclose a specific number, but it's very low. Remember also the consumption that you're using there is very low. Also it's a corporate paid connection, so to that extent you're getting you're not being paid per SIM. You're being paid for, let's say, 50,000 or 100,000 or maybe half a million SIMs. Where you have, you know, one billing and you are, you're getting the money. The place we have spent a lot of our time is creating this M2M platform of ours. Our own engineers have built it. This platform is amongst the best in the world. We offer all kinds of flexibilities, where a customer is able to provision a SIM on the fly, can do it by themselves, doesn't need to actually even contact Airtel. You know, the SIM is just delivered to them, and they can decide where to use it and when to use it. They can take it off. They can get all kinds of analytics with it. So these are the use cases that we are actually building on top of this, which is actually exactly what our customers are looking for. like, this number has almost doubled to almost INR 13 billion-INR 14 billion in last 1 year. It's growing fast. What kind of- It is growing fast. What kind of growth would you expect going forward? Do you think this kind of growth is sustainable? Well, I hope so. I think as more and more, Again, I'm not giving you a target or a forecast, but as more and more, you know, automation comes in across many, many industries, as more and more efficiency is being sought through using the power of information, then yes, these are opportunities that everybody's gonna look for because it's actually much lower in terms of cost than sending people to do the metering, for example. Or, you know, a truck that's on the highway, you wanna know what is the speed at which it's going. Is it overspeeding? Is it traveling at the wrong time? Is it in the right, is it moving in the right direction that you want it to? All of this is possible with this. Otherwise, it's not possible to even look at some of this. Many customers find this extremely useful because it adds value. Sure. That's it from my side. Thank you. Thank you very much, Mr. Vora. The next question comes from Mr. Vivekanand Subramaniam from Ambit Capital. Mr. Subramaniam, you may please unmute your side and ask your question now. Hi. Thank you for the opportunity. I have two questions. Firstly, Gopal, you've been highlighting how the non-mobile revenue streams are becoming more and more important. We have been seeing strong growth traction both in B2B and homes. Just wanted to understand from you know, in terms of your vision for the non-mobile businesses, how do you see the contribution trend in the next few years? That's question one. Secondly, any thoughts on the substantial headcount addition that you have done in the last nine months and in this quarter in particular? Anything you want to call out here? Thank you. Thank you for that. You know, I am very excited about our entire portfolio outside of wireless. I think that, you know, every part of our portfolio is important. Within this, B2B is a jewel in the portfolio. It's done, you know, consistently well, and I explained to you all the reasons. I do believe that we are operating in a INR 40,000 crore connectivity market. But there's also an adjacent market which is another INR 40,000 crore-INR 50,000 crore, which comprises CPaaS, cloud, SaaS, cybersecurity, data centers. All of these play to our strengths, our advantage. This is where we are now building a stronger portfolio. I see a runway for B2B over a period of time as we expand forth from our connectivity to beyond connectivity. In connectivity itself, there's a big opportunity. I can give you know, let me give you a few examples that we have a customer in Bangalore who's a large internet company. You know, by going deep in the B2B space, we were able to double the revenue within a six-month period. We have a customer in Delhi who is a financial service player, and we were able to quadruple the revenue by actually going deep, which is really offering the full portfolio of B2B solutions. When you look at these case studies, and I think a few quarters ago I did mention another customer, a bank or a financial service in Bombay, where we were able to go, you know, almost 4x. When you look at these examples, whether it's in banking, it's in technology space, it's in IT, ITES, these are opportunities which are, you know, particularly exciting for our field teams. We've got to make this into a toolkit which becomes a consistent way by which it is replicated more and more across. The other part I do wanna comment on is in our homes business, because here again is a very interesting business. Broadband, as you know, is exploding and we are right there really at the forefront of trying to drive this. DTH has been a drag, but I think with the recent strategy that we put in place, I'm hoping that next quarter we're able to report a better outcome. On headcount, I think it's, Soumen, you wanna talk about that? Yeah. You know, SME segment, we have channel partners who have deployed their resources. We believe that the SME segment needs to be attended to in a much more standardized and elevated method so that the width and the depth can be achieved, what Gopal referred to. We have in-sourced more than 1,000 people on that account who were earlier so-called off-rolls. That is why you see a significant jump in the headcount. Okay, the headcount point is very clear. Gopal, one small follow-up on the enterprises business. Has voice become that insignificant that the growth trends in enterprises now will be materially different from, let's say, what we were delivering in FY 2020, FY 2021? Because now we are consistently growing at double digits on the revenue side year-on-year. Sorry, I missed that question. Can you just repeat that? There was a bit of a problem on the line. Just repeat that. Sure. Gopal, my question was on the B2B side, has voice within the B2B revenue become so insignificant that we are now consistently able to deliver double-digit growth led by connectivity and the other service revenue streams? Is that how one should look at it? The reason I'm asking is this segment was, you know, stuck in a rut over FY2017-FY2021. Obviously, it's become smaller in terms of its relative contribution. It's still reasonable. Yes, this is the one part of the business that's not growing. To that extent, the underlying growth is actually faster. This is why with Airtel IQ and with all of the CPaaS offerings, we are trying to move a lot of this onto the cloud. We're trying to approach it in a different way. Yes, that is one of the headwinds in the business. Outside of that, all the other parts of the portfolio are growing. Connectivity part, we're gaining share because of the expansion that we're able to do. All the non-connectivity that is beyond connectivity, all the adjacencies, these are virgin markets where we are really like, you know, every deal we win is an incremental revenue and incremental market share to us. All right. Very clear. All the best. Thank you very much, Mr. Subramaniam. The next question comes from Mr. Nicholas Barrett from Macquarie. Mr. Barrett, you may please unmute your side and ask your question now. Yes. We are okay now, Avaada? Yeah. Yes. Okay. Sorry. Thank you. Slightly complicated question maybe, but looking at your Indian mobile ARPU, your mobile tariff for India. You discontinued a number of very low ARPUs maybe 9 months ago, and then you restructured your ARPU pyramid maybe 6 months ago. I, you know, get the dates wrong probably. Your ARPU keep increasing, right? Do you think that the change in the pricing structure and in the pyramid that you've done over several quarters is still leading to further ARPU growth, tariff growth today? Meaning that, you know, it takes some time for consumer to decide to upgrade from a feature phone to a smartphone. It takes time to decide to spend that kind of money, that there is probably some substantial increase in tariff. Levels for some consumers. Do you think that there is some reclaim effect, some, you know, delayed effect or long-lasting effect of the change in your pricing structure? No. I think that the shedding of customers that we did was, if I remember right, almost, you know, two years ago, I think, you know, where we shed close to 49 million customers in one, basically in a few months. I think that served us very well because it declogged our networks, it focused our organization to chase the right quality customers and really simplified our business. That's the reason we did it, and it's worked very well for us in hindsight. At that point, it was a risky decision. There was a lot of concern whether it will work or not, but we did some pilots and we then rolled it out. I think ever since then the drivers of ARPU increase are either tariff, which is we've had two rounds of tariff increase, or it's feature phone to smartphone upgradation, or it's monetization of data, or it's the movement from prepaid to postpaid, and so on and so forth. Those are the four drivers, and those stay intact, and that hasn't changed in the last few years. That's what I meant, Mr. Vittal, at the two rounds of tariff increase. Do you think this still plays a part in the increase in ARPU that we still see? No. This quarter, last quarter? No, that's all. That was all done. That typically gets done in three months, so no. Okay. Understood. The last tariff increase, I think, happened in, when was it? November 2020? Understood. Within your mobile revenue in India, very clearly, voice minutes are going down and data volumes are going up, right? How much does that explain the increase in EBITDA and EBIT margins? No, it has nothing to do with EBITDA and EBIT margins. I think you know, we are in the business of actually getting customers and getting ARPU. I think those are the two drivers of our business. Customers into the ARPU that you get is really the revenue that you generate. The reason that people buy data packs is because they see a lot more value. Yes, voice minutes have declined in this quarter. That could be on account of either seasonal factors or just the fact that maybe you know, we've reached a point where people don't see the value in continuing to speak more and more, and they have other things to do. I think the real driver for our business is the movement from feature phone to smartphones. The moment they get onto a smartphone, getting onto data, consuming data, so that you get the full ARPU that they are capable of delivering to you. You would say therefore that EBITDA, EBIT margin on voice and data are similar? Well, we don't kind of report it in that manner. Yeah. You know, you have to just look at the whole business. Yeah. Okay. Last thing. We don't look at it. I mean, we don't assess it the way you're asking. Understood. Last thing for me. Sorry for being long. You talked about CapEx. When do you see, or over which time period do you see peak CapEx? Well, I think that, you know, we have the following year is a year where we are going to both roll out 5G as well as rural. Like I mentioned, I think, our CapEx has been moderately around the INR 23,000 crore-INR 24,000 crore number per year. There could be some advancement of CapEx from the following year, which is the 2024-2025 year into 2023-2024. We will keep being very flexible. We will see how the uptake is. We will watch the space on rural. We'll make sure that we are trying to see the power of our data science models and see if it's actually translating revenue. We'll do the same thing on 5G. This is a modular business and, you know, especially on radio investments, you can turn them in and off or off and on literally in a matter of 30-60 days. It's just the timeline required to actually ship the material from the factories into the warehouses. This is highly modular, and we will wait and watch how it plays out, to determine what the ultimate level of CapEx will be for the following year. Have you decided how to price, how to sell 5G? I think that right now we are, you know, the plans that we offered are the same. So both 5G and 4G, you know, is at the same price. To that extent, data is data. If you've got a 5G device, your data will work on 5G. Thank you. Right now, that's the way we've gone for it. Thank you very much, Mr. Barrett. The next question comes from Mr. Rohit Kothari from DC Ventures. Mr. Kothari, you may please unmute your side and ask your question now. Hi, Gopal. Congratulations on a fantastic set of numbers. Just looking into delving into your financials this quarter, I saw that we generated a free cash of close to INR 3,500 crore. Can you, am I wrong to see, even with elevated CapEx next year, a free cash flow between INR 20,000 crore and INR 25,000 crore? That is number one. That's the first question. The second question is on the 5G pricing. Given such elevated CapEx is happening on 5G, we believe that there would be a INR 75-INR 100 rupee premium on the 5G pricing. So could you highlight what are your thoughts on that? Third is on the home broadband. We are close to 5.5 million subscribers, and I heard somewhere or some statement that eventual goal is to reach 20 million homes. What is the timeframe we should expect that to happen? Thank you, Rohit. Thanks for your comments. I think on the free cash flow, we are, you know, not at liberty to share the forecast for the next year because what you're asking us is a guidance of the entire business model. I think suffice it to say that, you know, we are comfortable as far as the operating cash flow is concerned to fund all our CapEx payments, all our CapEx requirements, even if it's elevated and pulled forward from the following year, in addition to paying down some debt and paying down some of our spectrum dues. To that extent, we are in a comfortable position there. On the CapEx front. I'm sorry, on the 5G pricing front, look, we've seen and assessed what's happening in other markets. In some markets, what operators have tended to do is price the 5G at a premium. Small premium, maybe 10%, 15%, 20%. Thailand has done it. Parts of the U.S. have done it. You know, even originally Korea had started with it. What we find is that the take rate of that is a fraction of the full base of customers. In other words, the ARPU is a illusion because, you know, if you're getting a smaller numerator of a larger denominator multiplied by the ARPU that you're supposedly getting, you're still not getting revenue. Ultimately, what we need for monetization is the tariff table in itself to go up. That's the first point. The second point is, having put the CapEx, you also want it to be filled out fast because you don't want to invest as much in 4G, so that you can displace the traffic that's coming from 4G onto 5G and over time refund those spectrum bands and then use all of it for 5G. That's the reason that we're currently at the same pricing. We don't know how that will play out. Of course we are also right now just building out the network, so we're still, you know, in the construction phase, and then we take a decision as to what we do in six to nine months. On homes, I think we did say that the market could potentially be anywhere between 35 million-40 million, maybe 40 million-45 million homes. We today are about 5.2 billion homes. We continue to accelerate this business, and we hope that we garner a significant part of that overall opportunity on home broadband. Just one more question, Gopal. What would be your aspirational target? What would be the timeframe when our net debt of INR 1.7 lakh crores today will touch INR 1 lakh crores? You know, a INR 70,000 crore debt reduction, when do you seek to achieve that time? Harjeet, do you wanna comment? Again, I mean, I don't wanna give any targets and guidance on this. I think just I mean, let me just headline it and then I'll hand it to Harjeet. I think, you know, our focus is to make sure that we run a tight prudent ship. We maximize our operating leverage. We try and find different sources of revenue and, you know, generate more and more free cash flow, which will ultimately pay down our debt. The debt that we have, by the way, a large part of it is benign debt because it's just DoT debt, government debt, so in a way it's a lease for spectrum payments. Harjeet, do you wanna add anything? No, thanks, Gopal. Rohit, you know, your question is fairly valid, but the three or four forward-looking variables there, how you project the EBITDA, which of course depends upon the tariff cycle, 5G utilization, et cetera. The CapEx, whether to the extent certain CapEx is brought forward or not, that's the second variable. I would say the third variable is really the ability or incentive to prepay out some debt, depending upon the interest rate cycles. I won't be able to comment directly on what could be a timeframe, but keep in mind when you were looking at FCF for the coming year, probably you did not take into account the finance lease unwinding portion that has to go out to the tower companies. As you look at EBITDA less CapEx, you should also factor in the finance lease payments to be done to the Indus Towers and the ADCs and other tower companies. Clearly, coming two years, maybe two and a half years' balance, there is a moratorium. Some bit of extra cash will be in the system, which can be utilized to pay down the debt. The last piece is, what happens if something needs to either be changed or re-looked at or not on the dividend policy? We have a very meager, conservative policy or philosophy rather, of passing through the dividends that we receive from our subsidiaries, Airtel Africa, Indus Towers being dominant, and a few others. That should stay, of course, but you know, The Board can of course try and relook at basis the free cash flow profile, both the sustainability of it, as also the pool being built up. These are the four variables. Arguably, this FCF is building up and is sustainable. Confidence is high. You know, how these variables play out and whether it takes 24, 36, 48 months, can't say today. Thank you. Thank you very much, Mr. Kothari. Due to time constraints, I would now hand over the proceedings to Mr. Gopal Vittal for closing remarks. Thank you very much for joining this call. For the engaging discussion. I look forward to seeing you next quarter. Thank you all. All the best. Thank you. Thank you everyone for joining us today. Recording of this webinar will also be available on our website for your reference.