Operators will have to roll out 3G aggressively: Akhil Gupta, Bharti Enterprises

Mumbai: Akhil Gupta, deputy group CEO & MD, Bharti Enterprises, has had a busy 2012, having steered the IPO of Bharti Infratel, the biggest public issue of last year. This year though, at least so far, has been all about the management restructuring at the group’s telco firm Bharti Airtel. Gupta, in a freewheeling interview to TOI, talks about the falling profitability at the country’s largest mobile services operator, mobile tariff hikes and the company’s new business model after buying out Alcatel Lucent from its managed network service JV. Edited excerpts:

The year started with a big management rejig at Airtel. How will this impact operations ?

We thought India needed special attention at this time, so Gopal Vittal will only look at India. And the rest of the countries in this region — Bangladesh and Sri Lanka which were being overseen by Sanjay Kapoor in addition to India, will come under Manoj Kohli, who is now the MD, Bharti Airtel. So it is basically only a change of guard in India with Gopal taking over from Sanjay.

You recently announced a new business model for managing fixed line and broadband networks as an independent entity. What’s the way forward?

This will help trim costs as the same workforce will manage optic fibre networks for, say, four operators. So the cost per operator will reduce. As an independent entity, we are talking to all the operators and inviting them to come join us, we hope they find merit in this. We have been big believers in the concept of infrastructure sharing, Infratel was one example. All of Airtel’s optic fibre has already been outsourced to this company. This is only a management company for now, unlike Indus Towers which has assets.

For Bharti Airtel, it’s been twelve straight quarters of drop in profits. Are the best days behind you or are you seeing signs of a rebound?

No, that’s not true. However, we have to walk the talk. If you look at our profitability, since we have taken on Africa, invested in 3G and 4G spectrum, the amortization and interest have all hit our net profit. Over the next few quarters, realized rates will firm up. We are bullish on data. With the pressure that is there on the sector, operators have no choice but to roll out 3G aggressively after having spent so much on spectrum. But things are improving, we see better profitability ahead.

You announced a tariff hike in the form of withdrawing discounts and promotions. Will headline tariffs go up?

I think more than just a tariff hike, which could also happen because costs are going up, irrational freebies need to be rationalized. Let’s wait till the end of the quarter and see how withdrawing discounts has impacted us. There is no choice but for the realized rates to go up, even at the cost of some minutes being compromised . This industry cannot thrive otherwise. Longterm sustainable players will have to follow this.

Seeing that losses from Africa have widened, was it the right time to enter the continent ? Also, do you miss not being in South Africa?

That was the only time we could have gone in for such a big acquisition. It did not come as a surprise the challenges that we have faced in Africa. A lot of outsiders are disappointed , but we are not. We are not magicians that we will go there and turn things around. Iam pretty happy with the way things are shaping up. It may look slow but the direction is right. We are not looking to get into South Africa, not in the immediate future.