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Mittal-Ambani bonhomie: Does 'friendship' mean end of bitter telecom wars?

While much is being said about the warmth at display between the two industrialists on Day 1 of the India Mobile Congress, experts feel they were only 'being civil'

Surajeet Das Gupta  |  New Delhi 

eliance Industries Chairman Mukesh Ambani and Bharti Enterprises Chairman Sunil Bharti Mittal arrives for inauguration of the
Reliance Industries Chairman Mukesh Ambani and Bharti Enterprises Chairman Sunil Bharti Mittal arrives for inauguration of the “India Mobile Congress 2017”, the country’s largest platform Connecting-Mobile-Internet-Technology, in New Delhi. Photo: PTI

To the surprise of many, Bharti Enterprises Chairman Mittal and Industries Chairman Ambani – arch rivals in the sector, where their respective ventures and Jio are baying for market share – displayed a rare public bonhomieon Wednesday. The occasion was the inaugural edition of the India Mobile Congress (IMC), and the heads of top service providers were sharing the dais.

With Mittal and Ambani exchanging warm notes and acknowledging each other as “friends”, one thought that came to many was whether this might mean an end to the bitter wars in the Indian market.

While Mittal’s has been an old and established operator, the recent emergence of Ambani’s Jio on the scene has caused a great disruption in the sector and left all incumbents rattled. More recently, Mittal and other incumbent operators have been aggrieved by the Regulatory Authority of India’s (Trai’s) decision to lower inter-connect charges (IUC) from 14 paise per minute to 6 paise, a move that is seen benefitting only Ambani’s company and against which many are set to go to court in a few days. Older fear they might lose over Rs 5,000 crore because of the cut in

Some of those present at the IMC venue say one should not make too much of the so-called bonhomie. Mittal and Ambani were only “being civil”, as the government wanted them to focus on its ‘Digital India’ agenda rather than use the forum to air their differences on IUC, the watchers argue. With Minister of State for Communications Manoj Sinha also present, “what do you expect two mature industrialists to do at a public forum? People are making too much about the statements”, says a senior executive of a leading company.

But many say there is a clear difference in the focus of Mittal and Ambani, from that of other incumbent telcos. Both Bharti and Jio have betted on the 4G revolution and the belief that the market will dramatically shift to data. This is also apparent from the fact that Bharti and Infotel (which was later bought by Jio) had in 2010 bid and won spectrum in the 2,300MHz band (4G), even as other operators were uninterested. At that time, many incumbents had publicly said India was not yet ready for 4G, and some even now claim that the band currently used for capacity building could not have sustained 4G on its own.

While Bharti in 2012 became the first company to launch commercial 4G services in India, it is also way ahead of all except Jio in making a technological leap to 4G voice-over-LTE. It launched its 4G services in Mumbai a few days ago and plans to go pan-Indian with it by the end of March next year. This will not only bring the company technologically on a par with Jio, but also give it the cost benefits that Jio enjoys at present. By comparison, while some others might roll out their 4G services only by the end of next year, the smaller ones might not roll out at all due to cash constraints.

Many incumbent operators maintain that India is still a voice-only market and Trai’s decision is forcing both service providers and users to move to data – at a huge cost that neither wants to incur. With over 500 million users in rural parts – at least 300 million of them using mobile phones only for incoming calls (they pay Rs 10-20 a month on recharges) – was a key element that helped telcos subsidise them. Without the income from termination of calls, there might not be any economic incentive to invest in rural markets. Also, that these customers are looking only at voice services is reflected in the present 4G subscriber base of only 25 million in rural India.

Besides increasing the cost for telcos, the decision forces customers to make a choice and shift to 4G LTE at a stiff price – now they will have to pay for a new device, and the cheapest available, Jio, costs Rs 1,500 upfront, plus a monthly commitment of Rs 153. That is much more than what they pay at present (many have been using devices priced under Rs 500). “We are not against Digital India or new technology. But if the government says it will be technology-neutral, why is forcing 500 million customers and telcos to move to data. It is anti-consumer; they will have to pay many times more,” says a top executive of a leading incumbent operator. 

First Published: Thu, September 28 2017. 19:17 IST