Airtel is used to brutal competition, it does not faze us: Gopal Vittal, CEO
We have been through many battles. We have had many bruises and scars on our backs but what gives us fulfilment is that we serve our customers well.
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In an interview with ET Now, Gopal Vittal, CEO, Bharti Airtel, says in the next may be 12 to 15 months, you will be left with perhaps four to five operators. That is a very good thing for the industry.
Edited excerpts:
What is the state of the telecom sector?
If you look at what has happened over the last 12 months or so, the financial health of the industry has deteriorated and with 10-11 players sitting in the market, it is an unsustainable situation for the amount of investments that the industry needs.
We have entered into an agreement with Telenor. Hopefully, with the regulatory approvals, there will be one less competitor. Aircel and RCom have entered into some kind of an agreement and the big one Vodafone and Idea have also entered into an agreement or potential agreement. In the next may be 12 to 15 months, you will be left with perhaps four to five operators. That is a very good thing to the industry because the extent of investments that are required to develop India’s broadband infrastructure needs a lot of financial scale. I would say it is actually a healthy development for the industry as a whole.
If you look at it, Vodafone-Idea is going to be a formidable player in terms of size, scale, capacity savings. From Bharti Airtel’s point of view, will that mean more investments into the network going forward? What is your game plan?
Will that be more investments because the market is really eying this merger from a two-fold perspective. One of course is that it will lead to consolidation but secondly and more importantly, Bharti is a number one player in the market right now but it will have very stiff competition from this joint entity which of course will be the largest player in the market. Will Bharti put in more money in the network? Will it also look at more M&As? Telenor is one but will there be more M&As for Bharti?
Two years ago, we announced a big investment programme called Leap. We are sort of halfway through that or may be 60% done. In last two years, we have rolled out 160,000 base stations. It is like redrawing the entire Airtel network all over again. So what we did in 20 years, we literally did in two years. The investments in network will continue as we continue to experience broadband growth and more importantly as we drive the broadband infrastructure across the country. Having said that, every competitor is respected. The competition in the industry has been brutal over the last 20-25 years and we are used to it. We are products of competition and so that does not faze us.
A lot of people say Telenor was a sweetheart deal for Bharti Airtel at no extra payout, they are getting spectrum with liabilities that need to be paid over a period of time. How soon will that be complete and more importantly how does that bolster Bharti’s spectrum footprint?
Let’s talk about the tariffs and how margins and pricing in the sector are immensely under pressure following Rel Jio’s plan. Bharti did come out with its own set of equally compelling plans. In your assessment, is the future going to be free voice, free roaming and it is just data where telcos in India have to make money?
We have killed domestic roaming. We have made a recent announcement. In factm our chairman made announcement on international roaming as well. We have killed domestic roaming and so in a way India is now one network and our customers can experience it wherever they go. We will continue to look at pricing as a lever. Unfortunately, once pricing comes down, it is very difficult to get it back up. So yes it is a very unsustainable level of pricing that we are at right now. The good news is that we had capacities and we can continue to serve customers and recently we were declared India’s fastest network by a third party independent assessment done on the basis of speed test across the country.
Do you think pricing is only going to go down because there is no way tariff can come return to a more sustainable level any time in the future, with Rel Jio also using the same price lever.
Let us wait and watch. If pricing comes down, the financial situation of most companies will deteriorate. Everybody is here to make a return. As an industry, this is an industry that makes a return of 1% or less than 1%. Now if you put your capital into a savings bank account, you will get more than 1%. So this is an unsustainable level of return and the job to be done over the next few years massive amount of investment has to be made. I believe the industry needs to be financially sustainable in order to make those investments and pricing is an important determinant of that sustainability.
Having said that, we are a competitive operator and for us market share is important. We do have premiums over many players. We have seen a lot of competition with deep tariffs over the past years. We tend to play that game as well as we could and we continue to do that. But I do believe the longer, the bigger point is that the eminent consolidation in the industry is a good thing to improve the financial health of the sector.
We respect Reliance Industries. They are a great company that has done a phenomenal job in terms of rolling out the infrastructure across the country. Our job is simply to serve our customers better and we will continue to be competitive in the marketplace,. We will make sure that we are rolling out our infrastructure, our broadband investments. I do not believe that this market will all be 4G in a hurry.
There are different kinds of Indias there are different Indias today, there are people who will give you just Rs 40-50 ARPU, there are people who will give you Rs 2000 or Rs 5000 ARPU, our job is to serve all of them, all of these Indias’ simultaneously.
How will you protect your market share?
One of the good things in this industry is that a lot of the investment is modular. As the traffic builds, you can keep investing and that is a situation where you can turn a base station with a different band of spectrum and that is really what we feel to be our strength.
You have to look at our 20-year history to see what we have done. We have been through many battles. We have had many bruises and scars on our backs but at the end of the day what gives a lot of fulfilment is the fact that we serve our customers and we do a good of that. So we are not so obsessed by anything other than that.
Are you finally disappointed with the fact that no decision was taken at the TDSAT level as far as the Rel Jio freebees are concerned? There is of course the CCI case that is still pending but for all practical purposes we are at the 17th of March. 31st of March is when the freebees end. The regulatory procedure has pretty much not been supportive of the incumbents?
I think let us wait and see. I think it is still sub judice because it is not the final order so we will wait and watch.
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