We are not averse to partnering Reliance Jio: Arvind Bali

Interview with CEO, Videocon Telecom

There’s a talk of Videocon Telecom, with spectrum in six circles, scouting for partners, including Reliance Jio Infocomm, which did not bid in most circles where the former has spectrum. Chief executive Arvind Bali, in an interview with Surajeet Das Gupta and Sounak Mitra, talks about the company’s plans, after it skipped the recently concluded spectrum auction. Edited excerpts:

Are you close to a deal with Reliance Jio?

Videocon Telecom had plans to bid for the 900-MHz spectrum in the Delhi circle and for additional 2-MHz spectrum each in our Punjab and Madhya Pradesh circles, to accommodate growing traffic in select pockets. However, we decided against it later. Delhi is an evolved market and any new player would need some differentiation to establish itself. We felt 4G (fourth generation) or LTE (long-term evolution) could have been the catalyst for making this differentiation. However, as the 4G/LTE ecosystem is not that evolved in the 900-MHz band worldwide, the deployment cost is exorbitantly high, making it unviable. Further, in the Punjab circle, 25 of 92 blocks were not available in Ludhiana and Amritsar, where we were facing a little congestion. So, there was no point in going for it.

What about Reliance Jio?

On being associated with Reliance Jio, at this point in time, all I can say is we are not averse to partnering with others or exploring investment avenues. As far as Reliance Jio’s successful bid in Videocon Telecom’s circles is concerned, I am not sure how would one explain Reliance Jio bidding for Gujarat and Madhya Pradesh circles where Videocon already has a presence. I think this can be best answered by Reliance Jio.

Some say the sector is ready for a consolidation wave (smaller players likely to be bought out by larger ones). How do you see this in case of Videocon Telecom?

Telecom, from a two-three-player market, grew to a 10-12-player one, leading to hypercompetition, price war and massive depletion of rate for a minute, which is unsustainable. I see the sector becoming a six-seven-player one. Videocon Telecom is a long-term player and here to stay. We were a pan India player and aspire to become one again, however, in phases. The incumbents also started their journey with a regional presence, gradually moving to pan-. We, too, have similar plans.

What do you think of the current spectrum auctions. Where do you see the sector going?

I think the open-market mechanism is the right way to derive the exact and fair value of spectrum, a scarce resource. We are happy with the way the auction has concluded. Paying market value for the spectrum shall mean additional investment in business. What I see as an immediate outcome is incumbents will further raise rates to recover cost. India offers the lowest mobility rates across the world and it’s the incumbents and the market leader which can raise prices, so that others could follow.

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