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telecom | IST

Sunil Mittal vows to bring telecom industry together; talks to Voda's Nick Read, will reach out to Ambani

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He said that rather than being fierce competitors, time has come for all the telcos -- Jio and VIL included -- to close ranks and work together as "team India" but vehemently ruled out the possibility of any tariff cartelisation among the players.

After years of an intense price war, telecom czar Sunil Bharti Mittal on Thursday vowed to reach out to rivals, including billionaire Mukesh Ambani, to collaborate on issues such as infrastructure sharing, as he sought to build on the reforms package announced by the government to nurse the bleeding sector back to health.
Mittal said the telecom package offers Vodafone Idea a "lifetime opportunity" to reclaim lost ground and exhorted promoters of the telco to make the most of the "bold" and "gamechanging" reforms by stepping up their contributions, and investments to revive the beleaguered company.
He also said that rather than being fierce competitors, time has come for all the telcos -- Jio and VIL included -- to close ranks and work together as "team India" but vehemently ruled out the possibility of any tariff cartelisation among the players. Tariffs need to go up, and ARPU (Average Revenue Per User) should reach Rs 200 levels by end of the fiscal, he said.
"It is pointless now fighting the battle. Market shares have been reasonably set... people have got to where they had to get to... for our own sake, we need to be responsible. I will play my part, others have to play their part... How long can you have an industry with unsustainable structure," Mittal said in a virtual briefing a day after the blockbuster telecom reforms were announced by the government. He, however, was quick to add that if others chose not to pay heed and pushed more aggressively to grab market share, "Airtel will fight back".
Mittal said he had reached out to Vodafone's Nick Read after the telecom reforms were announced by the government, and will also speak to RIL's Mukesh Ambani, and expressed his willingness to take the lead in bringing the industry together to fully unleash India's telecom dream. On whether a "collaboration" in the market bordered on cartelisation, Mittal emphasised that the telecom market has been, and will be competitive.
Conversations will be about the health of the industry and market distribution structure, and not on tariffs. "How can it be? When you have to have more market share against each other, how can you have tariff discussion. Impossible," Mittal quipped.
Tariff is never an area where industry can sit together and talk "and neither we should", Mittal said but added that on market practices, distribution of margins and dealer margins there can be more discipline. Striking a conciliatory note, Mittal called on the industry to heal and move past "bloodshed" and "skirmishes", spoke of infrastructure synergies and "sustainable tariffing", and said the government's firm moves would boost manufacturing of telecom infrastructure.
Urging the players to collaborate in areas such as infrastructure sharing to reduce costs, he said sharing common infrastructure, building networks in rural areas, spectrum, fibre, submarine cable, and tower sharing are clear benefits of industry coming together. Mittal said ARPU needs to move up and hoped that sensible approach to market will be taken from here on.
"That is where you need to get to an average of Rs 200 and I feel that we are now confident enough to say a lead can be taken in this area in certain packages in certain areas, and we will probably end up doing it," Mittal said. More needs to be done on GST, licence fee, high levies "but that's a separate chapter", Mittal said, adding that Airtel will actively work with the government on the outstanding issues.
The next generation 5G needs to be seen as a force multiplier, Mittal said and hoped that the regulator will look into the industry's demands for reasonable reserve price for 5G spectrum. Flagging "defects" in the spectrum policy, Mittal said there have been instances when his company had no choice but to renew its spectrum despite the high prices and "irrational bidding".
Mittal said that he will turn 64 soon and pointed out that big reforms in telecom sector have come at a time when he is looking to script the next chapter of his life. Airtel is a professionally-run company, with separate roles for Chairman and MD, and will continue to run smoothly, he observed.
He also said that he would take a call on his next course of action after another 1-2 years of furthering the company's vision and growth. Mittal hinted that he may do something new, "pick up a strong big bet", in coming years, probably in India, where lot of conversations are going on in infrastructure pipeline projects. "... The glorious run that Airtel and Bharti have had in the last over two and a half decades should end with a good closing chapter. I think we are at a point where we can now sense that happening, a little bit more work in the coming quarters and years and I think I would have delivered to my own satisfaction and industry that serves the country very well," Mittal said.
He said his outreach to other industry honchos were aimed at ensuring that industry truly becomes a role model for many other infrastructure sectors in the country. Airtel's top boss said he had told Nick Read that the Voda Idea has a "lifetime opportunity" to retake what has been a "lost cause", and that it was time for both Vodafone and Kumar Mangalam Birla (Aditya Birla Group Chairman) to step up their own contribution into their company.
"I feel that if I was in their place, this is an opportunity to retrieve a lot of value back into hands of people who have invested large amounts of money. Vodafone has put in USD 20 billion, am sure Birla would have put in billions of dollars. It is time for them to really take advantage to contribute their own money and resources, to revive the beleaguered company," Mittal said. According to Mittal, his conversations with Mukesh Ambani will be around telecom and India.
"Let's see what comes out of that conversation," he said. Airtel will opt for payment moratorium, offered in the telecom relief package, and redirect the cash flow to aggressively build networks.
With regard to interest on payment moratorium, Mittal said that Airtel will weigh, when the offer comes from the government, on whether to go for equity conversion mechanism or pay cash. The company's board will take a decision at that point, Mittal said, adding that with interest component working out to Rs 7,500-Rs 10,000 crore, the stake involved may work out to 2-3 percent in case the company opted for it.
The moratorium will free up cash flow to the extent of Rs 40,000 crore, and that amount is sufficient to meet the market's requirements. Bharti Airtel and Tata Group had announced a strategic partnership for implementing 5G network solutions for India. Mittal said that 5G trials with Tatas may start around April and May next year.
Disclosure: RIL, the promoter of Reliance Jio, also controls Network18, the parent company of CNBCTV18.com.