Bharti Airtel Chairman Sunil Mittal believes India will be an important player in cutting-edge 5G technology but wants pricing to be investor-friendly. In a conversation with Business Standard, Mittal spoke about the urgent need to raise mobile tariffs, the industry’s interest in upcoming 4G spectrum auction, the company’s stand on 5G and the government move to bar Chinese equipment vendors in telecom.
When asked about Airtel’s plans to raise tariffs, Mittal said: “it will depend on the biggest player”. At present, Reliance Jio, with over 400 million mobile subscribers, is the largest telco in the country, having beaten the long-time market leader Airtel. Jio’s wireless market share is more than 35 per cent against Airtel’s 28 per cent, according to the latest data from the Telecom Regulatory Authority of India (Trai).
While stating that the current low tariffs in the sector were not sustainable, Mittal said “somebody has to take a call depending on market conditions”, while referring to industry rivals as well as Trai. He, however, added that the industry was not looking at a major tariff increase in one go.
The indications are that Airtel may not take the first step in hiking the rates, though it was Mittal who took the lead in raising the issue earlier in the year. Mittal had said in August that it was a tragedy that 16 GB data was coming for Rs 160 a month in India, while arguing it was time to raise the tariff in an industry which is financially stressed.
Vodafone Idea Managing Director Ravinder Takkar, in a post-earnings call last month, had said the company would not shy away from taking the first step in raising tariffs.
According to Takkar, there are strong indications that competition would follow suit.
Despite the stress in the sector, excessive competition stopped telcos from raising tariff. As for Airtel, it wants the average revenue per user (ARPU) in a month to rise to Rs 200 and subsequently to Rs 300. Airtel's mobile ARPU is pegged at Rs 162 a month for the September quarter and only a tariff rise can take the company closer to its goal in an industry which had last raised rates in 2019.
On Airtel’s vision for 5G, Mittal told this newspaper that there was no doubt that India would be a key player once the technology is rolled out. “My guess is it will take a couple of years for 5G to come to India in a meaningful manner.”
But Mittal voiced concern over the “unreasonably high” 5G reserve price as recommended by the regulator. Not only has the industry been opposed to the Rs 492-crore per megahertz reserve price for 5G spectrum, even a task force constituted by the Finance Ministry had in May suggested rationalisation of prices to make the next generation services affordable to all.
“The 5G spectrum pricing should be in such a way that it encourages investments in telecom networks,” Mittal said. “Price at the current level will not serve anybody’s purpose.” In fact, the task force had argued that the 5G reserve price in India was much higher than that in most other countries — something that the regulator has contested.
On the 4G auction slated for the January to March quarter, Mittal said Airtel would participate in a limited way, to fill up the gaps in its network. While Jio is seen as bullish on 4G auction, Vodafone Idea is expected to stay away mostly.
In an analyst call recently, Airtel Managing Director and CEO Gopal Vittal had said that there was some need for the company to complete the spectrum footprint in the sub-gigahertz band, which has advantage in indoor areas and in deep rural locations. It may also need to add some “capacity spectrum”.
Responding to the Union government considering a ban on Chinese equipment vendors in telecom services, Mittal said: “We would comply with any decision taken by the government on the matter.” He said Airtel has among the lowest exposure to Chinese vendors compared with some rivals. “It will not be a huge issue for us,” he said.
The total debt of the top three telcos — Jio, Airtel, and Vodafone Idea —was estimated at as much as Rs 3.9 trillion last year. In addition, the industry faced dues linked to adjusted gross revenue of Rs 1.47 trillion.