India needs 3 pvt players in telecom; hope govt offers support: Airtel CEO

KM Birla had in June this year offered to hand over group''s stake in debt-laden Vodafone Idea Ltd to government or any other entity to ensure that company remains a going concern.

Amid Vodafone Idea’s struggle to stay afloat, Bharti Airtel CEO Gopal Vittal on Wednesday asserted that a large nation like India needs three private players in telecom, and hoped the government would take measures to offer relief to the financially-stressed industry.

Vittal said the recent changes effected by Airtel in some of its plans is a step towards raising average revenue per user (ARPU), which is currently “abysmally low”.

At the same time, he indicated that the company, which already has a premium positioning in the market, may not initiate a broader tariff revision unilaterally and risk any erosion of customers and competitiveness.

On the Supreme Court dismissing applications by telcos for recalculation of AGR-related dues, Vittal said while Airtel is “disappointed” with the outcome, the company has provisioned for the onerous payout and already paid over Rs 18,000 crore covering its obligations for the first few years.

“On the next steps relating to any review petition, we will be guided by legal advice and no decision has been taken on this yet,” Vittal said at Airtel’s Q1 earnings call.

Responding to an analyst query on how Airtel perceives industry structure to be in next 1-2 years, and whether the Sunil Mittal-led telco is prepared for a two-player market, if the situation arose, Vittal said the Indian market can easily accommodate three private players.

“I think just from national perspective, it would be appropriate to see an industry structure where three players not just survive, but thrive and of course the government player is always there,” he said.

Vittal’s comments assume significance in the backdrop of looming uncertainty over Vodafone Idea.

“I feel as a country we do need three players... it is a large enough country with 1.3 billion people, which can easily accommodate three (private) players in this market,” Vittal said. Aditya Birla Group Chairman Kumar Mangalam Birla had, in June this year, offered to hand over the group's stake in debt-laden Vodafone Idea Ltd (VIL) to the government or any other entity to ensure that the company remains a going concern.

Vittal said, “There is clearly a situation of serious financial stress in the industry and we have seen one of the players actually saying to the government that they may not be able to pay their dues coming up in March 2022. We hope that the government does something to provide some relief to the industry.” 

Flagging the “extremely low” ARPU in the Indian telecom market, Vittal said that the level needs to rise to Rs 200 and eventually Rs 300.

“As we have always said, ARPU in India is extremely low and at this level, our return on capital is in the low single digit. ARPU must rise first to (Rs) 200 and eventually to (Rs) 300," he said.

If ARPU rises, the industry repair can "certainly happen", he noted.

Having three private players in the telecom market would be an "appropriate outcome" for a country as large as India, he said, adding that substantial investments have already been infused by the industry.

"There are lots of jobs not just direct but indirect jobs, and there are many parts of the ecosystem which depend on industry for employment and livelihood...I would love to continue to see a three-player market," Vittal pointed out.